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Homework Question About Cost Estimating

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This topic contains 4 replies, has 3 voices, and was last updated by  sriramsg 2 months, 2 weeks ago.

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  • #240705

    sriramsg
    Participant

    Dell has 6 days of inventory, Gateway has 3 weeks.  Inventory cost is 0.8% / week of inventory.  Dell’s net profit is 4.5%. Assume all else is equal and estimate Gateway’s profit

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    #240706

    Mike Carnell
    Participant

    @sriramsg That lloks a lot like a homework problem. How about you take your best shot at it before we jump in and help.

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    #240707

    sriramsg
    Participant

    Actually Dell has 6 Days of inventory .

    Dell Has 6 Days of inventory – = 6/7 =0.857 weeks

    Inventory Cost = 0.857 * 0.8 %  = .06856 of what ??im not sure

    Sales Revenue = COGS/Inventory

     

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    #240747

    Andrew Parr
    Participant

    A clue: All other things are the same  – “Assume all else is equal” makes the problem a little simpler.

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    #240772

    sriramsg
    Participant

    Dell Has 6 Days of inventory – = 6/7 =0.857 weeks

    Inventory Cost = 0.857 * 0.8 %  = .06856 of Revenue

     

    Net Profit = Revenue-Cogs-Inventory Cost-expenses

     

    Gateway

     

    3 weeks of inventory

    Inventory cost = 3 * .8% = .024 of revenue

     

    If all other than inventory are equal Gateway profit is 1.5 %

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