Net profit margin, Operation Management

Net profit margin:

1. Transportation firm now spends 60 percent of the sales revenue it receives in the supply chain, and has a net profit margin of 6 percent. The company can invest $100,000 in one of two ventures to increase its profits.

a. How many dollars of additional sales would be required to equal $1 saved through the supply chain?

Answer: $4.35

b. One venture is advertising-based, and is expected to increase revenues (sales) by $600,000 (after spending the $100,000). How much will this increase profits?

Answer:

c. The other venture applies the money in supply-chain efficiencies that are expected to save $200,000 (again, after spending the $100,000). How much will this increase profits?

Answer:

d. Which of these two ventures should the company choose?

Answer:

e. If it expects business to improve next year such that it would only spend 30% of its sales revenue in the supply chain (profit margin remains at 6%) should it change its decision in Part d)?

Posted Date: 2/14/2013 5:38:27 AM | Location : United States







Related Discussions:- Net profit margin, Assignment Help, Ask Question on Net profit margin, Get Answer, Expert's Help, Net profit margin Discussions

Write discussion on Net profit margin
Your posts are moderated
Related Questions
(b) Suppose Norwitch has worked out a new contract, accepted by all its customers, of being allowed up to one week to satisfy each demand. Norwitch still uses a 99% "fill rate" as

Define and discuss the importance of reliability in the selection process.

Jane Reed bakes breads and cakes in her home for parties and other affairs on a contract basis. Jane has only one oven for baking. One particular Monday morning she finds that she

What are the benefits and disadvantages of free international trade for the United States? Examples would be helpful also.

A chemical firm produces sodium bisulfate in 100-pound bags. Demand for this product is 30 tons per day. The capacity for producing the product is 50 tons per day. Setup costs $100

Which would be the required qualifications to consider an employee for a top management position?

Responsiveness - Customers Needs for a Product How quickly the operations system reacts to changes in customer demand. This may be considered as customisation but in terms of

From the scenarios, we see that Chris and Erica have different communication styles that could potentially have a negative impact on the business. Suggest at least two strategies t

Dinoco produces three types of oil products: domestic oil, petrol for car and aviation fuel. Each product must meet the minimum average octane regulation. The average octane levels

Assume you are going to give a presentation to about 30 people in a medium sized room. In order to maximize the contrast, you used black letters on white background in your slides.