A Grocery Chain Is Interested in Exploring the Impact Effective

question 68

Essay

A grocery chain is interested in exploring the impact effective supply-chain management would have. Suppose that for every $1 of sales 4% is profit, 50% is spent in the supply chain, and the remaining 46% is evenly divided between fixed and variable costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit?
Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (27% profit margin combined now).

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Definitions:

Expectations Theory

A theory in finance which suggests that the yields on long-term bonds will equal the average of short-term interest rates expected in the future, adjusted for a risk premium.

Rational Expectations

The theory suggesting that individuals form forecasts about the future based on all available information.

Critics

Individuals or groups that express disagreement or disapproval towards certain ideas, policies, or works, often seeking to present alternative viewpoints.

Great Recession

A significant global economic downturn that occurred from late 2007 through mid-2009, recognized as the most severe since the Great Depression.