Pepe Jeans Case Study

Pepe Jeans Case Study Question 1 Flexible governing body would give to an rack upition in the gross revenue of about 10%. accredited sales - £ 200M 10% of £ 200M would be £ 20M Profit in the beginning taxes(PBT) at the rate of 32 % would implicate an adjoin in the PBT of £ 6 400 000 ( 32% x £ 20 000 000) prime(prenominal) resource Decrease of lead date would lead to an increase in constitutes by 30%. Currently the yearly woo of sales is 40% of sales of £ 200 000 000 that is £ 80<( 40%x £ 200M) If the price goes up by 30% it would average 30% of £ 80M that is £ 24M In return for this increase in cost the company could make an approximate increase in the PBT of £ 6 400 000 that would still mean (24 M 6.4M) = £ 17.6M additional curb on the company. The advantage in this utility(a) is that the company does not abide to make any initial enthronement entirely has to have this additional burden every year. Since no enth ronement is do , no payback period is calculated. Second secondary sign mulish cost for equipment £ 1 M Renovations £ ccc 000 add up £ 1.

3M Operations cost £ 500 000 Lead time 6 weeks 40%x £ 200M= £ 80M yearly cost of sales at 40% 6/52 X £ 80M = £ 9 230 000 gunstock carrying cost is 30% of £ 9 230 000 that is £ 2 769 000(30%x £ 9 230 000) Recurring cost= inventory carrying cost+ trading operations costs= £ 2 769 000 + £ 500 000= 3 269 000 Second choice £ 6 400 000 £ 3 270 000= £ 3 130 000 we lend an increase in the yearly profit before taxes Now, the fixed investment made by the company is £ 1 300 000 (calculated above) so the pa yback period is (1.3/3.13) x 52 = 21.6 weeks! . This is the prefer alternative and should be recommended to Pepe. Question 2 Other alternatives The different alternative that Pepe could pass could be to continue with the current arrangement. It is splendiferous from the financial full stop of view but it is unprotected from the marketing point of view. If Pepe continues to put forward on requirements to grade firm entraps...If you want to get a full essay, order it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay