Case Dollar Tree Logistics

In the table the improvements only considering units shipped are highest among the letters A-D opposed to G-H. The A-D warehouses are respectively: Denver, Portland, Chicago, and Boston. The G-H warehouses are respectively: Atlanta, St. Louis, Los Angeles, and Fargo. The most impressive improvements in order from greatest to least considering shipping were for Denver, Portland, and Chicago. It is vital the company takes notice of Chicago 's improvement due to the larger volume it also held in 2012 than other warehouse locations. However, the question is comparing performance during the first five months of the years; thus, we need to look at the unit and cost analysis when comparing the shipments. Notice St. Louis cost per unit shipped is the only successful improvement. The cost for the first five months of 2012 was $9.97, that then lowered to $9.07 for the first five months of 2013. We find this information by taking the warehouse cost and dividing by the shipped units that year. For example $23,232 divided by 2,331 units makes $9.97 while caculating 2013 yeilds an improved $9.07. Other warehouses grew in cost per unit shipped during the 5 months when considering 2012 and 2013. Additionally, Denver was on strike and had 15 days

Nonetheless, Dollar Tree acknowledges its market power; its competitors, Wal-Mart, Dollar General, and Family Dollar have an uphill battle to reach Dollar Tree business model. Moreover, Dollar Tree product differentiation gives them an additional leverage over their competitors. As mention earlier, Dollar Tree sells its entire product for $1 or less. They accomplish this by purchasing a variety of products from private vendors at wholesale prices. In contrast, its competitors purchase brand name products at higher prices, thus making it difficult to compete with Dollar Tree prices. These are the way Dollar Tree utilized to map, scan,

In 1970, Macon Brock, Doug Perry, and K.R. Perry started K&K Toys in Norfolk, Virginia. The toy store grew to over 130 stores on the East Coast which created the foundation to the store we now know as Dollar Tree. K & K toys were sold in 1991 and all assets were applied to the Dollar Tree stores which opened in 1991.  The Dollar Tree is headquartered in Chesapeake, Virginia and is known for the store with all items $1.00. By 2008 the brand had expanded and opened more than 3,000 stores gaining popularity which landed their name in 100th spot on the Fortune 500 list. In 2012, Dollar Tree ranked #39 as a Fortune 500 company leading the way in the dollar store sector operating in 48 states across the United States and Canada (Dollar Tree, 2017).

Variable cost changes along a $1 to $10 dollar scale swing from $27 to $31.50 in profit maximizing point. Total optimized profit ranges from $278,000 down to $171,125 when the variable cost changes while revenue remains stable hovering around $348,000. Elasticity swings from 1.019 to 1.436 and optimal unit count falls from 13,000 to 10,750 when the variable cost rises.

Study Objectives 1. 2. 3. 4. 5. Distinguish between variable and fixed costs. Explain the significance of the relevant range. Explain the concept of mixed costs. List the five components of cost-volume-profit analysis. Indicate what contribution margin is and how it can be expressed. Identify the three ways to determine the break-even point. Give the formulas for determining sales required to earn target net income. Define margin of safety, and give the formulas for computing it. Questions 1, 2, 3, 6 4, 5 6, 7, 8 9 10, 11, 17 5, 6 Brief Exercises 1 2 1, 3, 4 Exercises 1, 2, 3, 4, 5 1 2, 3, 4, 5, 6 7 6, 7, 8, 9, 10, 13 6, 7, 8, 9, 10, 11, 12 11, 13 1A, 2A, 3A, 1B, 2B, 3B, 4A,

PROBLEM 15.50 (40 minutes) Customer profitability analysis: manufacturer 1 Customer profitability analysis: Sales revenue Cost of goods sold Gross margin Selling and administrative costs: General selling costs General administrative costs Customer-related costs: Sales activity (8,6 x $1000) Order taking (15, 20 x $200) Special handling (800, 600 x $50) Special shipping (18, 20 x $500) Total selling and administrative costs Operating profit CaesarStream $190 000 80 000 110 000 24 000 19 000 8 000 3 000 40 000 9 000 $103 000 $ 7 000 NeroCom $123 800 62 000 61 800 18 000 16 000 6 000 4 000 30 000 10 000 $84 000 ( $22 200)

15. See the attached “Regression Data I”. We are using the number of radios, TVs, and DVD players stocked to predict the profit, revenue, and cost for future periods. Based on the output,

(B) The full production cost (per gallon) of the Polynesian Fantasy and Vanilla products as per new costing method (Louise’s suggestion) is as below:

The Central Fulfillment Center is a centrally located pharmacy that fills prescriptions for around 224 HEB retail pharmacies all over the state. They can offload prescriptions that don’t need to be filled right away, therefore giving the pharmacist and technicians a smaller workload to handle. Central Fill (CF) provides Next Day services or Same Day services to 83 stores in the San Antonio and Austin area. They have two main roles in the industry of pharmacy which are to quickly and efficiently serve as many patients and to relieve busy pharmacies to allow more patient interaction and counseling. Their turnover time is faster so there is a less of chance of expiration.

COGS, R&D and SG&A were all modeled as percentage of sales figures and it was assumed that these accounts stabilized as sales plateau and efficiencies in production are realised. Hence COGS, R&D and SG&A were predicted at 30%, 8% and 22% respectively. Due to the consistent nature of Contract Revenue at $3.5

In the base case, we assumed 11.0% compounded annual growth rate. This is based on modest growth in domestic sales, and optimistic expectations for the international, Babies R Us, and online sales. Online sales can save relevant costs of physical display of products and associated costs of running a store. EBITDA margin is assumed higher and will be higher in the near future as the sales grow. Capital expenditure and depreciation amortization expenses are assumed fairly constant over the years . Overall operation will generate enough cash to support debt and interest payments. If Toys R Us would be able to specialize some of baby products, video games and

acture its hoists in-house or outsource it to a contractor, they need to assess each option in terms of total unit costs which will affect its net income as shown below:

Wal-Mart is an American publicly incorporated large retail company founded by Sam Walton in 1962. The secret of Wal-Mart’s tremendous success is its ability to provide an immense number of merchandise from electronics to pharmaceutical goods at a discounted price all in one store. As the largest employer in the world, Wal-Mart enjoys an estimated 20% of the retail grocery business.

Sales are projected at 100,000 units per year. Price per unit is £38, variable cost per unit is £25, and fixed costs are £900,000 per year. The tax rate is 35%, and we require a 15% return on this project. (a) Calculate the accounting break-even point. (b) Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure? Explain what your answer tells you about a 500-unit decrease in projected sales. (c) What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a £1 decrease in estimated variable costs. (d) Suppose the projections given for price, quantity, variable costs and fixed costs are all accurate to within ±10%. Calculate the best-case and worst-case NPV figures. 5. The firm SENSITIVITY is studying the realisation of a project of launching a new toothpaste. The Marketing Department indicates the following estimations (in thousands of euros): Parameter Sales (quantity) Advertisement costs Sales price Value 1,450 tonnes 10% of sales 5/tonne

| Own brand | E-commerce | Bargain market | Price | BBQ: $600 | BBQ: $620 | BBQ: $500 | Price | Furniture: $850 | Furniture: $880 | Furniture: $650 | Price | Accessories: $50 | Accessories: $55 | Accessories: $40 | Unit contribution margin | BBQ: $500 | BBQ: $300 | BBQ: $200 | Unit contribution margin | Furniture: $600 | Furniture: $420 | Furniture: $220 | Unit contribution margin | Accessories: $40 | Accessories: $20 | Accessories: $10 | Total revenue | 8988000 | 15732000 | 10350000 | Total gross profit 2012/13 | 7084800 | 164000 | 3625000 | Additional fixed costs | Add lease $1000000 Add labour $500000 Add plant (depreciation): $500000 | Add training: $50000 Add online store development: $100000 Add new plant and equipment (depreciation): $150000 Add labour: $250000 Add reconfiguration of warehouse/office: $50000 | See approved budget (no change in fixed costs) | Total net profit 2012/13 | 200086 | 1679286 | 1259714 |