Dollar Plan Case Study
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DOLLAR PLAN CASE STUDY
AMM-2500: Dollar Plan Case study Project2
PART 1
CASE DESCRIPTION
You were recently promoted to the position of buyer for the Accessory Department in a large women’s specialty store-Planet Blue. Your market week is about to open, and in anticipation of this, you must be prepared with certain dollar goals for the coming season. Market week is where retail buyers meet with suppliers and place merchandise orders for a future period.
It is the policy of your store that the buyer be responsible for the formulation of the departmental dollar six-month plan. You know that if this plan is to be of value, the figures established must be ones that you can actually achieve. You also know that despite your inexperience you will have to be prepared to explain and justify the plans and strategies you will use as guidelines when merchandising for the period under consideration.
Where shall you begin? You know a sound basis for future planning is to analyze the past results of your "new" department. Sobefore you develop your plan for Fall, you decide to review the figures below, which show the performance achieved by the Accessory Department for Fall of last year.
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Your Divisional Merchandise Manager (DMM) provided you with following
figures from Last Year
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SEASONAL FIGURES FROM FALL SEASON LAST YEAR
Actual LYPlan TY 135,388.00 $Calculate?
8.50%Calculate? Calculate?Calculate?
46.95%Calculate? 32.45%Calculate?
Calculate?Calculate? Operating Expenses%
Profit %
Retail Reductions $
Retail Reductions %
Initial Mark-up %
Gross Margin %
Actual LYPlan TY 1,592,700 $ Calculate? 7.50%Calculate?
Calculate?Calculate? Calculate?Calculate? Calculate?Calculate?
Average Monthly Stock
% Inc./Dec over LY
Net Seasons Sales
Average Retail Stock
Stock Turnover
GMROI
AMM-2500: Dollar Plan Case study Project5
**Retail Reduction [Include MD, Employee Discount and Shortages) LY Total Seasonal Markdown%=6.8% LYTotalEmployeeDiscount%=1.2% LY Shortages%=0.5%
**CashDiscount =3% (of Net Sales) Alternations=Non-Existent
•For planned year, you can use same %values for all factors above except Markdown%.
•MD% should be adjusted for planned season based on the information in case study questions.
LAST YEAR MONTHLY FIGURES-FALL SEASON
SalesStock (BOM)Markdowns July125,262.00 $ 601,260.00 $ Aug140,155.00 $ 546,600.00 $ 16,245.00 $ Sep262,730.00 $ 867,000.00 $ 17,600.00 $ Oct240,290.00 $ 742,500.00 $ 18,960.00 $ Nov246,360.00 $ 960,800.00 $ 24,368.00 $ Dec525,740.00 $ 1,419,500.00 $ 35,200.00 $ Jan177,425.00 $ 550,000.00 $ 23,015.00 $ Feb221,765.00 $ 576,580.00 $
Season Total (Aug-Jan)
1,592,700.00 $ 5,086,400.00 $ 135,388.00 $
Fall Season
AMM-2500: Dollar Plan Case study Project6
CALCULATIONS
•Complete Last year figures on the dollar plan excel using the figures from previous slides •Calculate monthly S-S ratio for last year •Calculate Monthly sales % for last year •Calculate monthly MD% for last year •Calculate End-of month [EOMs] for last year •Calculate Planned Purchases for last year •Planned purchases @ retail •Monthly sales+ Monthly Markdown + Monthly EOM –Monthly BOM
•Planned purchases @ Cost Planned purchases at retail X Initial Markup%
AMM-2500: Dollar Plan Case study Project8
PART 2
Your Divisional Merchandise Manager (DMM) informed you that though the sales increases for the
Fall season of last year had been greater than planned, there were other areas in the overall
operation that needed improvement.
CLASSIFICATIONS UNDER ACCESSORY DEPARTMENT
JewelryHandbags
Belts and Sunglasse s
Scarves and Headgear
Legwear and Shapewear
AMM-2500: Dollar Plan Case study Project9
YOU ARE AWARE OF THE FOLLOWING FACTS: •The nationwide economy is moving briskly; top management has planned on
an overall store-wide sales increase of 7%; •Legwear has had a strong surge of sales for the first six-month period (sales
were planned with a 15% increase but actually wereahead 23% over the year before); fashion influences of long, leggy looks with slits in dresses and skirts continue as important apparel looks; the rising trend for legwear in the Spring season,
•After 4 dismal years, also saw the revival of body suits which has stabilized to a fair contribution of total sales.
•The textured hosiery introduced in the spring retailing at 20% higher retail prices is expected to create an explosion.
•Also, cold weather scarves are growing in demand and are expected to increase the scarves sales by 15% from last year.
•Belts and sunglasses however are not doing too well and may experience another sales dip of 2% from last year.
AMM-2500: Dollar Plan Case study Project10
Your DMM has asked you to develop a dollar plan for the upcoming fall season. She has requested a meeting with
you-to discuss your projected goals for the six months before they are finalized.
The following issues will be addressed in the meeting:
QUESTIONS
a)Sales Plan a)Howwill you use the LY figures in preparation for your plan for the Fall season
of this year? (1pt) b)Whatis your sales inc./dec. percentage projection for the planned fall season
and Why? Provide explanation. (1+1pts)
c)It would seem as if the sales trend in your department lends itself to a further increase of sales. Why must you estimate as accurately as possible (neither too high nor too low) the amountof sales you can generate during this season? (2 pts)
d)As the buyer, what 3 strategies can you plan in order to achieve the sales gain you propose? (1.5pts)
**Hint: Strategies are not the same as methods. Strategies relate to specific actions you can take at store level to increase sales. Read Text.
AMM-2500: Dollar Plan Case study Project12
QUESTIONS
4.Having set your projected sales figures, you now want to adjust your stocks to the proper size in order to achieve the planned monthly sales figures. Your DMM gave you August 1 stock figures of $660,000 and February 1 stock figures of $510,000. He told you to work out the BOM stock figures for each of the other months in your six-month plan. There are three approaches to planning the amount of stock necessary for projected sales figures.
a)What are they? (2 pts)
b)Which will you choose? Why?(1 pts)
AMM-2500: Dollar Plan Case study Project13
QUESTIONS
5.After you have determined all BOM stock figures for the entire period, what measurement will tell you how well you balanced your stock and sales for the entire period? Explain.(1 pt)
6.In addition to planning sales and stocks, the markdown amounts are to be included. The typical markdown percentage in the industry for the accessory department is 10.5%. The amount taken by your predecessor last year was 6.8%. In planning the amountof reductions for the entire period:
5.how will you plan the markdowns on your current plan-In dollars and In percentages? (1 pt)
6.Will they be higher or lower than LY? Explain Why.(1.5 pts.)
AMM-2500: Dollar Plan Case study Project14
QUESTIONS
7.Because your predecessor only achieved a turnover of ________ (calculate based on the estimates provided on slide 4 and 5), and the typical turnover in the industry for your department is 3.7, you realize that this was one of the "areas that needs improvement."
a)How can you show an increased T.O. on the dollar plan you are going to submit at present?Describe any 3 strategies that you will use to increase stock turnover in your department.(2 pts.)
AMM-2500: Dollar Plan Case study Project 15
INSTRUCTIONS 1.Dollar plan excel with embedded formulas is worth 10 points. 2.Explain your responses to the case study questions in detail in a separate
word document. Do not use bullets for answering the questions. a)The written part should not have any grammatical errors; should be typed (Times New
Roman, 12 font, 1.5 line spacing) and should have page numbers. b)Make sure both your word document as well as the Excel sheet are well formatted.
They should look like a report you would submit to your manager. c)Submit 1 excel and 1word document for this assignment.
3.Planned Purchases should not be negative for planned season. If you are getting a negative number for last year, plan for purchases should be balanced out (sales, MD and BOM) so that it is positive for the year that you are planning for. Negative planned purchases indicate a big flaw in planning.
4.Read the chapter carefully and practice all problems before attempting the case study.
AMM-2500: Dollar Plan Case study Project16