Let’s assume that a retailer has two different buyers working on a specific merchandise category (i.e., Buyer 1 and Buyer 2).
The table below contains information on the effectiveness of each buyer by providing you with the inventory left at the end of each month (for a six-month period). The dollar amount associated with this inventory reflects what the retailer had to pay for the inventory (i.e., the retailer’s cost). In addition to EOM (end-of-month) inventory at cost, you also have the sales and COGS associated with each buyer’s purchasing decisions.
Buyer 1 Buyer 2Month EOM Inventory at Cost EOM Inventory at Cost
Jan $22,000 $15,000
Feb $25,000 $22,000
March $15,000 $18,500
April $30,000 $23,750
May $45,000 $38,850
June $42,500 $38,225
COGS $400,667 $500,648
Sales (or Revenue) $5,100,337 $6,800,398
- What is the average inventory at cost for each buyer?
Buyer #1 =
Buyer #2 =
- Utilize the information in the table to compute the sales-to-stock ratio for each buyer.
Buyer #1 =
Buyer #2 =
Another retailing metric that is important during the merchandise planning process is gross margin return on inventory (or GMROI).
- Utilize the data provided in the table to calculate GMROI for each buyer.
Buyer #1 =
Buyer #2 =
- Which buyer is doing the best job? Why? (Make sure that you explain your answer.)
Answer:
Sample Solution