Asked by Nishallinee Shanmugam on Jun 25, 2024
Verified
A regional grocery chain spends 70% of its sales in the supply chain, and has a net profit margin of 2%. They have just initiated an Internet-based inventory management program that is expected to save the chain $500,000 per year. What is the equivalent increase in sales to this saving? Use Table 11.3, reproduced below. 
Internet-Based Inventory
Inventory management systems that use internet technologies to monitor and manage the stock levels of products.
Net Profit Margin
A financial metric showing the percentage of revenue remaining after all operating expenses, taxes, and interest have been deducted.
- Evaluate the monetary repercussions of savings in the supply chain compared with increases in sales.
Verified Answer
GP
Gerti PeposhiJun 26, 2024
Final Answer :
The relevant entry in Table 11.3, 70% of sales and 2% net profit, is $6.25. If $500,000 can be saved, the equivalent value of increased sales is $500,000 × 6.25 = $3,125,000.
Learning Objectives
- Evaluate the monetary repercussions of savings in the supply chain compared with increases in sales.