Indiana University, East - BA 321

INDIVIDUAL ASSIGNMENT FOR LECTURE 9

Problem1)Hau Lee Furniture, Inc., described in Example 1 of this chapter, finds its current profit of

$10,000 inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $25,000 so he can obtain the bank’s approval for the loan.

1. What percentage improvement is needed in the supply chain strategy for profit to improve to $25,000? What is the cost of material with a $25,000 profit?
2. What percentage improvement is needed in the sales strategy for profit to improve to

$25,000? What must sales be for profit to improve to $25,000?

Problem 2.Using sources from the Internet, identify some of the problems faced by a company of your choosing as it moves toward, or operates as, a virtual organization. Does its operating as a virtual organization simply exacerbate old problems, or does it create new ones?

Problem 3.Baker Mfg. Inc. (see Table 11.9) wishes to compare its inventory turnover to those of industry leaders, who have turn-over of about 13 times per year and 8% of their assets invested in inventory.

1. What is Baker’s inventory turnover?

2. What is Baker’s percent of assets committed to inventory?
3. How does Baker’s performance compare to the industry leaders?

Problem 4.

Arrow Distributing Corp. (see Table 11.9) likes to track inventory by using weeks of supply as well as by inventory turnover.

1. What is its weeks of supply?
2. What percent of Arrow’s assets are committed to inventory?

3. What is Arrow’s inventory turnover?