Question 8b- Recommendations
In companies which have several hundreds of SKUs, profit analysis is important to know which ones fall outside the bounds of acceptable profitability or are decreasing in profitability. At store 9857, it is recommended that floor space should be reduced for classes of products that have the lowest total gross profit contributing around 5%. According to table 1, these classes include shelf liner core, appliances-core, kitchen organization, reusable bags, dinnerware-core, glass/ceramic servicing-core, closet/bath/STOR non-core, dinnerware non-core, and mops/brooms/clean non-core.
Evidence show that these classes of products are actually not so profitable. Such aggressive stocking of these least profitable products will lead to low profits, weakened brand images and increases in hidden and control cost through high holding costs.
Table 1: Pivot Table Showing both $ and % of Gross Profit
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
