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DVD4less Question 1. Net Savings and Input Data Original Order Fill Rate 97% Modified Order Fill Rate 99% Annual Orders 112000 112000 Orders Filled...

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DVD4less Question 1. Net Savings and Input Data Original Modified Annual Orders 112000 112000 Orders Filled Correctly 108640 110880 Service Failure Orders 3360 1120 Input Data Units Redelivered/Rehandled 3339.84 1117.76 % Correctly Filled 97% 99% Redelivery/Rehandling Cost $66,796.80 $22,355.20 Annual Orders 112000 112000 224 Lost Sales Units 20.16 2.24 Revenue/Order $500.00 $500.00 0.2 Cost of Lost Sales (Gross Profit) $4,032.00 $448.00 Gross Profit/Order $200.00 $200.00 Total Service Failure Cost $70,828.80 $22,803.20 Lost Sales Rate 0.6% 0.2% Cost Savings of 1% Improvement $48,025.60 Rehandling Cost/Order $20.00 $20.00 Invoice Deduction Rate $35.00 $35.00 Sales $55,989,920.00 $55,998,880.00 Transportation Cost $1,950,000.00 $1,950,000.00 Less: Invoice Deduction $116,894.40 $39,121.60 Warehousing Cost $1,460,000.00 $700,000.00 Net Sales $55,873,025.60 $55,959,758.40 Interest Cost $3,000,000.00 $3,000,000.00 Cost of Goods Sold (CGS) $33,593,952.00 $33,599,328.00 Other Operating Cost $750,000.00 $1,250,000.00 Service Failure Cost $70,828.80 $22,803.20 Inventory $5,000,000.00 $3,500,000.00 Gross Margin $22,208,244.80 $22,337,627.20 Cash $50,000.00 $50,000.00 Transportation $1,950,000.00 $1,950,000.00 Accounts Recievable $250,000.00 $250,000.00 Warehousing $1,460,000.00 $700,000.00 Fixed Assets $64,000,000.00 $64,000,000.00 Inventory Carrying $1,250,000.00 $875,000.00 Inventory Carrying Rate 25% 25% Other Operating Cost $750,000.00 $1,250,000.00 Net Worth $30,000,000.00 $30,000,000.00 Total Operating Cost $5,410,000.00 $4,775,000.00 Earnings Before Interest and tax $16,798,244.80 $17,562,627.20 1 Net Saving is $ 458629.44. Interest $3,000,000.00 $3,000,000.00 2 Tax (40% of EBIT - INT) $5,519,297.92 $5,825,050.88 Net Income $8,278,946.88 $8,737,576.32 ROA has increased from 11.95% to 12.89% Profit Increase of 1% Improvement $458,629.44 Asset Deployment Inventory $5,000,000.00 $3,500,000.00 Accounts Recievable $250,000.00 $250,000.00 Cash $50,000.00 $50,000.00 Fixed Assets $64,000,000.00 $64,000,000.00 Total Assets $69,300,000.00 $67,800,000.00 Ratio Analysis Profit Margin 14.82% 15.61% ROA 11.95% 12.89% Inventory turns/year 6.72 9.60 Trans. as % sales 3.49% 3.48% Whse. as % sales 2.61% 1.25% Inv. Carry as % Sales 2.24% 1.56% Asset Turnover 80.6% 82.5% Financial Leverage 2.31 2.26 Return on Net Worth 27.60% 29.13% Order Fill Rate 97% Order Fill Rate 99% Other ratios have also improved. Profit margin has increase from 14.82% to 15.61%.
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DVD4less Strategic Profit Model for 97% Order Fill Rate Sales $55,873,025.60 Gross Margin $22,208,244.80 COGS $33,664,780.80 Net Profit $8,278,946.88 Variable Expenses Net Profit Margin % $10,179,297.92 14.82% Total Expenses Sales $13,929,297.92 $55,873,025.60 Fixed Expenses $3,750,000.00 Return on Assets Financial leverage Return on Net Worth 11.95% 2.31 27.60% Sales Inventory $55,873,025.60 $5,000,000.00 Financial leverage=Total Assets/Net Worth Asset Turnover Financial Leverage= 2.3100 Accts. Recievable Current Assets 0.806 $250,000.00 $5,300,000.00 Net Worth = $30,000,000.00 Total Assets Other Current Assets $69,300,000.00 $50,000.00 Fixed Assets $64,000,000.00
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