Page 141 - DMGT554_RETAIL_BUYING

Retail Buying

Notes While in the Marketplace, Buyers:

 Can feel the pulse of the marketplace
 Enjoy the privileges of the earliest possible delivery dates
 Gain insight from market representatives

 Trade information with noncompeting buyers
Discounts

 Cash discounts
 Anticipation discounts
 Quantity discounts
 Seasonal discounts



Caselet What Price and What Profit?

hawn Kelly manages a retail store in the Village Mall. The store sells a limited
assortment of athletic merchandise and over the last two years it has expanded the
Sathletic footwear department to respond to changing market conditions.
Three months ago, Shawn purchased 300 pairs of cross-trainer sneakers from a supplier at
a cost of $48.30/pair. Shawn decided that he would use a 50% markup on the price to sell
this particular line of merchandise. Inventory records at the end of the first month indicated
the sneakers were not selling as quickly as expected. The store had sold only 125 pairs at
the original price. Shawn marked the remaining inventory down 20% to stimulate sales.
At the end of the second month, the store had sold an additional 100 pairs at the sale price.
The remaining 75 pairs were marked down an additional 25% at that time to deplete the
inventory. By the end of the third month, the entire stock of this purchase order had been
sold.

Recently, a shipment of 100 pairs of soccer shoes of various sizes arrived at the store.
Shawn wants to price the shoes and place them on display in the store immediately, as the
soccer season is less than 1 month away.
Shawn has asked you (the store’s bookkeeper) to analyze these situations and provide him
with the following information:

1. The amount of profit or loss realized from the sale of the sneaker order over the
3-month period.
2. The actual percent of markup after all markdowns were applied.

3. The marked price per pair of soccer shoes if they cost $35.00 per pair. Twenty percent
(20%) of the order is expected to sell at a reduced price of $42.00 per pair, and the
markup required is 60% on cost. (Round the sales price to the nearest cent.)
You are to base your analysis of the sneaker order strictly on the cost and sales data
provided for the 300 pairs of sneakers. Also, the store estimates its operating expenses at
40% of sales.
Source: http://wps.prenhall.com/chet_rogers_mathematic_1/42/10876/2784402.cw/index.html

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