Target Profit Goal
To: DigiLife Store Managers
From: Carlos Ferrera
Re: Target Profit Goal
Good morning, store managers,
This year’s target profit goal for each DigiLife store has been set at $1,000,000 . We expect you to exceed this goal, and we will offer whatever support we can to help you get there.
With the release of the new Amulet, you should see a sharp increase in your sales and a sharp increase in your profits, too, as long as you don’t order too many or too few of them at a time. I will go over the problems and costs associated with both of those scenarios in a separate memo.
If it looks like your store is unable to meet the $1,000,000 goal at any time during the year, please alert me immediately so we can discuss a plan to get you back on track.
The Finance team will track your progress in the Target Profit area of your dashboard.
Good luck!
Carlos Ferrera
Regional Manager
Cost of product: $95/unit
The sales price of the Amulet is $200/unit.
Supplier has confirmed that this will be the average per-unit cost when we place orders in 50-unit increments (Each box has 50 units).
Costs of ordering and delivery: $6,000 per order
We have reached an agreement with the shipping service. All purchases will be billed at a flat rate of $6,000 for each order placed in the normal order cycle, which requires a 5 days lead time.
Rush orders will be charged $40 extra per unit. They will arrive the next day.
The Accounting Department estimates the cost of holding inventory to be $1.35 per unit per day. This amount includes warehouse rental costs and insurance.
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Thanks,
Sales Volume Versus Profits
To: DigiLife Store Managers
From: Carlos Ferrera
Re: Reminder About Sales Volume Versus Profits
Hello, store managers,
While we all love to see high sales volume, profit is the most important thing to the company (and, therefore, to you). As I’m sure you can imagine, having a lot of sales but low profits doesn’t do anyone much good.
To help you succeed this quarter and every other quarter, we want to point out what we think are the top threats to your profits:
1. Stockouts. If a customer enters your store looking for the Amulet and you are out of stock, you can expect to lose that sale. Expect the customer to drive to another store or order online. The days of backorders are long gone.
2. Excess stock. This is very costly, particularly for your electronics that need to be in a climate-controlled warehouse. The cost of storage will eat into your profits considerably.
Please keep these threats in mind as you make your ordering decisions this month.
Many thanks,
Carlos Ferrera
Regional Manager
