46 of them between 35 and 54 and middle class 64 have household annual incomes

46 of them between 35 and 54 and middle class 64 have

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46% of them between 35 and 54) and middle class (64% have household annual incomes greater than $50 K with amedian income of about $65 K)3. In an Oct 2010 survey conducted by Michael’s, 63% of respondents said they planon making gifts to save money this year. 75% percent said they plan to make some of their holiday decorations aswell. Recently, Michael’s has launched “Six weeks of inspiration” gift-making workshops at the stores.Michael’s products contain plastics, paper, wood, paint. An increase in commodity prices can adversely affectthe cost of manufacturing these products. This can in turn increase the purchase cost of Michael’s from its suppliers.A large set of suppliers are mid- to small size Asian companies with cash flow and capital access issues. Michael’splaces purchase orders about 8 months in advance with these suppliers. For example, the Xmas decorations thatare in the market now were ordered in Spring 2010. These goods reached the seven US distribution centers (DC)in trailers in August-September. The bulk is broken in DCs by taking merchandise from trailers and putting theminto smaller crates that are sent to stores. A single crate can contain various merchandise. The stores shelve theXmas merchandise right after they remove Halloween items. Since Asian suppliers are mid- to small size companies,they demand advance payments: Michael’s pays suppliers in US dollars when it places orders.[3P] a) Michael’s third quarter includes months of August, September, October, and the fourth quarter has Novem-ber, December, January.The third quarter includes special days such as Back-to-School and Halloween.Whatspecial days are included in the fourth quarter? Decide and explain if the Michael’s sales are seasonal. Back-to-school week and Halloween week. The revenues during these weeks turn out to be very close as they are$86 M and $91 M in the US. Can we conclude from this similarity that merchandise sales are not seasonal?Ifnot, what additional data would a Supply Chain manager examine to establish/refute seasonality? The data yousuggest should be easy to collect or already existing in the sales database. 1 This question is inspired by OPRE 6366 guest lecture on Nov 3, 2010, delivered by Manoj Chopra, Vice President of Pricing at Michael’s. However, the information given here does not necessarily represent Michael’s business practices.

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