Inventory Performance Report

Inventory Performance Report

Summary

The calculations in the sample performance report indicate a margin percentage of 57.05%, 54.41%, 53.13%, 62.59%, and 70.48% for items 1234568, 1234569, 1234570, 1234571, and 1234572, respectively. The overall margin percentage is 59.30% for the subject case. The other aspect calculated was the sell-thru percentages for the items. The values obtained from the calculation are 23.33%, 44.17%, 70.40%, and 26.53% for items 1234568, 1234569, 1234570, and 1234571, respectively. Also, the overall sell-thru percentage calculated was 44.16%.

Results

The summary in the above section informs the following results:

2 (a)

Assuming a targeted minimum percentage of 57.8%, items 1234568, 1234569, and 1234570 have a margin percentage below the target. However, items 1234567, 1234571, and 1234572 have a margin percentage above the target.

2 (b)

Assuming the targeted sell-thru percentage on the group of items is 44.5%, a slight margin does not achieve the target because the overall sell-thru percentage attained is 44.16%. The underperformance can be attributed to items 1234568, 1234569, 1234571, and 1234572. Notably, these four items had a sell-thru percentage below the target of 44.5%.

3 (b)

I selected this case, item 1234572. The item has a sell-thru percentage of 28%, which is way below the targeted sell-thru percentage of 44.5%. However, the item has the highest margin, which indicates higher profitability. According to Tulsian (2014), profit margin expresses the relationship between profit and sales, which determines a firm’s profitability and efficiency when conducting business activities. Notably, the retail price for the item is $18.80, and the cost is $5.55. As the two are high, I still consider that item 1234572 is the best item to be selected with a lower-than-targeted sell-thru percentage and generate more economic value for the firm.

Conclusions

The summary above indicates that only two items have a margin percentage above the average. On the part of the sell-thru percentage, three things have a sell-thru percentage of above average. However, a deeper analysis is required for item costs before deciding which items should be dropped or continued.

References

Tulsian, D. (2014). Profitability Analysis (A comparative study of SAIL &amp TATA Steel). IOSR Journal Of Economics And Finance, 3(2), 19-22. https://doi.org/10.9790/5933-03211922

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Managers analyze data to make business decisions and recommendations. This exercise gives you practice in calculating, analyzing, and recommending your observations to management.

Instructions

You will compose a business memo addressed to your manager that includes both parts 1 & 2 below. To begin, download the following memo template: Walmart Memo Template.

1. Calculate the margin and sell-thru percentages for the listed items in the Sample Inventory Performance Report spreadsheet.
   57. Assume the targeted margin percentage for the group of items in the report is 57.8%. Which items have a margin percentage that is on target, below target, or above target?
   58. Assume the targeted sell-thru percentage on the group of items is 44.5%. Was the target achieved? If not, identify which items were most responsible for under-performance.

2. Select one of the scenarios below and present a persuasive case to management for its implementation:
   1. Lower-than-targeted average margin percentage for the group of items. (Be sure to consider the sell-thru rate when considering what action to recommend.)
   2. An item that may have a lower-than-targeted sell-thru percentage. (Be sure to consider the cost and retail price when considering what action to take.)
   3. An item is expected to stock out before receiving the next order.

Format Instructions: Please use the memo template provided for this assignment and include all required information. See the Supplemental Resources for assistance with your writing. Upload your completed spreadsheet with your memo.