Question

3. An automotive service shop sold $600,000 worth of tires last year. The cost complement for tires and accessories is 0.75. The demand for last year is given as follows:

January has $60,000 tire sales. February has $40,000. March has $60,000. April has $48,750. May has $48,750. June has $51,000. July has $47,500. August has $40,000. September has $47,500. October has $45,000. November has $49,000. December has $62,500.

A.) Given the above sales for last year, calculate the index in the forecast for this year if the retailer expects a 4% increase over last year.

B.) Given this year's December forecast sales and planned reductions of $10,500; along with planned inventory for December 1st is $40,000 and for December 31st is $50,000. As of November 15th, the retailer has ordered $20,000 (@cost) worth of tires for December delivery. What is the open to buy (@cost) for the rest of the month of December?

Answer 1

Ans A:

Month	Expected sales for Yr 1 ($)	Expected sales for Yr 2 $ ( Nxt Year ) = Yr 1 * 104%
Jan	$60,000	$ 62400
Feb	$40,000	41600
March	$60,000	62400
APril	$48,750	50700
May	$48,750	50700
June	$51,000	53040
July	$47,500	49400
Aug	$40,000	41600
Sept	$47,500	49400
Oct	$45,000	46800
Nov	$49,000	50960
Dec	$62,500	$ 65000

Ans B :

Dec Forecast Sales of this Year                  = $ 65000

Less : planned reductions                           = $10,500

Expected Sales                                                = $ 54500

Less : Inventory for December 1st            = $ (40,000)

Add : Inventory for December 31st            = $50,000

Expected Total Purchase for Dec              = $ 64500

Less : Purchase till November 15th           = $ (20,000)

Purchase for rest of the month of December = $ 44500