The $8 Million Dollar Plan

*A tentative plan for Inventory buy- timing and its plausible, financial impact on Gross Sales.

by Hamilton Manalo and John M. Curtin

October to January Constitute our most Inventory-Dependent Months.Historically, we have under-ordered in November causing a shortage of

inventory for December (Our Highest grossing month) and attempted to catch up causing over-ordering that affects January (our lowest Grossing Month).

The plan will be dependent upon raising inventory levels only in areas of consistent sales, but shows a strong correlation in the specific months under the scope (October

to January) between higher inventory and nearly-equal higher sales.

The sales of units in December over the last two years have shown that over 90% of the available inventory in those months is turned over. This turn-over is important, but has room to lower as we sacrifice turnover for increasingly higher gross profit. The point of this study is to find an acceptable turnover minimum for December which will maximize gross sales during the month without leaving more then 20,000 units by the first day of January. As of the first of January, ordering picks back up and we stock up for the proceeding 50% turn-over months and begin the new year stronger then the last.

The plan in Units:As of October 1st: 75,000 units stocked at Amazon, all Lightning deals for Black Friday set.As of November 1st: 155,000 units stocked, plan for 35,000 sales.As of December 1st: After 35,000 Nov. sales,120,000 units ready for December sales, no ordering.End of December: begin ordering for February, rebuild to 70,000 units for February.As of January 1st: If sales have turned over at least 80% (has been above 90%) of inventory, we are left with 24,000 for January sales. If Dec. sales stay at 90% fill in orders can be made, but this is our lowest month and is the best place to miss sales.

$8 Million ProofAvg. Price per Item: $55

Units Sold in November: 155,000 units (35,000 sales X $55)= $1,925,000Units Sold in December: 120,000 Units (120,000 X .8 X $55)= $5,280,000 = $7,205,000

Units Sold in November: 155,000 units (35,000 sales X $55)= $1,925,000Units Sold in December: 120,000 Units (120,000 X .9 X 55) = $5,940,000 = $7,865,000