HED 460 Inventory Initial inventory Units on shelf at beginning of season (1,919)

HED 460 Inventory Replenishment/total inventory Within the season (weeks 3-17 out of 20), an additional 3,573 units are received, based on reorders, totaling 5,492

HED 460 Inventory Average Inventory Shelf stock was 1230 units on average, during the season Inventory Turns Total offering/ average inventory 5492/1230 = 4.47

HED 460 Sales 96.5% of the units offered were sold during season 3.5% of goods will be liquidated at season’s end 84.9% of units sold at initial retail price (sell through)

HED 460 In Stock On the average, over the entire season, 97.3% of the SKU’s were in stock Before 1 st markdown, in stock percentage was 99.8%

HED 460 Lost Sales Over the entire season, 2.1% of customers left empty-handed Nearly all customers found an item to purchase up until the 1 st markdown (.0% lost sales)

HED 460 Service Level 97% of customers found their first choice SKU in stock for the whole season This is not a customer service variable

HED 460 Revenues $131,042 sales generated from customer sales $1554 generated from liquidation (jobbing off) Total revenue is $132,596 Revenue/unit is $132,596/5,492 or $24.14

HED 460 Costs Wholesale cost of goods was $68,648 Additional procurement costs were incurred Ordering, handling, shipping, carrying, overhead

HED 460 Margins Gross margin Total revenue (NS) – COGS 132,596 – 68,648 = 63,949 GM/Sq. Foot Ratio of GM to sales floor space 63,049/1500 sq. ft. = $42.03

HED 460 Margins % Gross margin GM/NS (total revenue) 63949/132,596 = 48.2% % of GM potential Potential is GM$ obtained if all units sold at initial retail

HED 460 Margins Adjusted GM GM – procurement costs 63,949 – 14,041 = 49,908

HED 460 Margins GMROI GM/Average Inventory $ at cost Average Inventory at cost = average inventory * unit cost 1,230 * $12.50 = $15,375 $63,949/$15,375 = 4.16 GMROI

HED 460 Margins GMROISL Since we were only in stock 97.3% of the time, GMROI is adjusted 4.16 *.973 = 4.05

HED 460 Financial Output Correlations LSAGMGMGMROI AGM-.76 GM GMROI AI

HED 460

In Class Activity – 5 pts. Complete handout with other group members, explaining concepts as you go Write down group members’ names on paper and hand in at end of class to receive the 5 points

HED 460 Retail Industrial Revolution Large scale retail growth Increase in store size and store numbers - problems Formal retail systems From depot to Marketing – concept of customer service

HED 460 Retail Industrial Revolution Variations in consumer demand Local demand vs. territory Shifts in marketing channel relationships Co-operative relationships Purchasing direct from producers Specialization Centralization to decentralization

HED 460 Inventory Asset that did not affect demand Financial rather than merchandising Katz at R.H. Macy Apply scientific practices Filene – Model Stock Plan 1930 Industrial practices adapted to retail

HED 460 Model Stock Plan Establish 3 profitable price points Allocate 85% inventory to those three Scientific method of forecasting Focus on rapid inventory turnover Adjust inventory levels by consumer buying habits Plan purchases based on sales and cash plans

HED 460 Characteristics of Staple Mdse. Imperceptible style changes Predictable sales patterns Relatively short delivery period Regular and frequent reorder period

HED 460 Terminology (R) Rate if Sale (RS) Reserve Stock (DP) Delivery Period (RP) Reorder Period

HED 460 Minimum Stock Use unit calculation (RS + DP) * R

HED 460 Maximum Stock Minimum stock plus consideration of reorder period Use unit calculation (RS+DP+RP) * R

HED 460 Maximum Stock Example (1+2+1) * 150 = 600 Max. stock

HED 460 Basic Stock List OH = On hand OO = On order R = Received If DP = 1 then record R in the same week you put it OO If DP = 2 then record R in the week after you put it OO S = Sold

HED 460 Basic Stock List Unit descr. Max. Stock OHOORSOH Moon beams (18- 6=12) 12 (came in) 108 (18- 10=8) Ultra stone Ara- bella 3827