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    Case Study Solution

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    samyak
    The document presents a case study analyzing the financial costs and profits of a clothing manufacturer named Amir deciding whether to buy cloth from suppliers or manufacture it himself. Tables of data on thread count, sales, costs of production, administrative expenses, and profits are presented and analyzed to determine which option would be most profitable. Considerations beyond finances like transportation costs, quality checks, and time delays are also discussed for Amir to make a fully informed decision.

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    Case Study Solution

    Uploaded by

    samyak
    1K views6 pages
    The document presents a case study analyzing the financial costs and profits of a clothing manufacturer named Amir deciding whether to buy cloth from suppliers or manufacture it himself. Tables of data on thread count, sales, costs of production, administrative expenses, and profits are presented and analyzed to determine which option would be most profitable. Considerations beyond finances like transportation costs, quality checks, and time delays are also discussed for Amir to make a fully informed decision.

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    international case study about star textiles

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    The document presents a case study analyzing the financial costs and profits of a clothing manufacturer named Amir deciding whether to buy cloth from suppliers or manufacture it himself. Tables of data on thread count, sales, costs of production, administrative expenses, and profits are presented and analyzed to determine which option would be most profitable. Considerations beyond finances like transportation costs, quality checks, and time delays are also discussed for Amir to make a fully informed decision.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    1K views6 pages

    Case Study Solution

    Uploaded by

    samyak
    The document presents a case study analyzing the financial costs and profits of a clothing manufacturer named Amir deciding whether to buy cloth from suppliers or manufacture it himself. Tables of data on thread count, sales, costs of production, administrative expenses, and profits are presented and analyzed to determine which option would be most profitable. Considerations beyond finances like transportation costs, quality checks, and time delays are also discussed for Amir to make a fully informed decision.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6
    At a glance
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    The case study analyzes the profitability of Amir manufacturing cloth himself versus buying from suppliers based on thread count, sales, costs, and profits. Manufacturing himself is more profitable with every increase in thread count.

    Amir is considering the profits calculated based on thread count, sales, costs if he manufactures the cloth himself versus buying from suppliers as shown in the tables.

    Transportation costs may double as the cloth moves to different locations, increasing time and delaying payments. Sampling costs may increase and reduce bargaining power.

    Case Study Solution

    By: Ankit
    Kartikey
    samyak
    Sheetal
    Shivam
    Q.1 ) Use Table 1 to calculate the profit per meter if Amir decides to get the amount
    of the cloth shown in Table 2 manufactured instead of buying it from suppliers.

    As per the conclusion of the figures seen Excel sheet, Amir will earn higher net profit with
    every thread count if he decides to get the amount of the cloth manufactured.
    Thread Count 70x60 76x64 80x72 76x64 80x80 Total
    Sales(meters) 540,000 460,000 280,000 210,000 230,000  
    Manufacturing Sales 200,000 150,000 100,000 80,000 80,000 610,000
    Price 86 102 120 115 132  
    Discounted Price(2.5%) 83.85 99.45 117 112.125 128.7  
    Sales(INR) 46,440,000 46,920,000 33,600,000 24,150,000 30,360,000 181,470,000
    New Sales (INR) 16,770,000 14,917,500 11,700,000 8,970,000 10,296,000 62,653,500
                 
    Cost of Sales
    Purchase Price 42,120,000 41,860,000 29,680,000 21,420,000 26,450,000 161,530,000
    New Purchase Price 12,800,000 11,250,000 8,700,000 6,720,000 7,600,000 47,070,000
    Cut Piece(Meters) 1,026,000 874,000 532,000 399,000 437,000 3,268,000
    New Cut Piece(Meters) 380,000 285,000 190,000 152,000 152,000 1,159,000
    Packaging(Actual) 540,000 460,000 280,000 210,000 230,000 1,720,000
    New Packaging(Actual) 640,000 535,000 330,000 250,000 270,000 2,025,000
    Freight in(Actual) 520,000 430,000 260,000 202,000 220,000 1,632,000
    New Freight (Actual) 1,040,000 860,000 520,000 404,000 440,000 3,264,000
    Greige 44 51 60 54 63  
    Dyeing 20 24 27 30 32  
    1% of Greige Check 2,000 1,500 1,000 800 800  
    Brokerage Check 88,000 76,500 60,000 43,200 50,400 318,100
    Greige Check 40,000 30,000 20,000 16,000 16,000 122,000
    Total Cost of Sales 44,206,000 43,624,000 30,752,000 22,231,000 27,337,000 168,150,000
    New Total Cost of Sales 14,988,000 13,036,500 9,820,000 7,585,200 8,528,400 53,958,100
                 
    Gross Profit 2,234,000 3,296,000 2,848,000 1,919,000 3,023,000 13,320,000
    New Gross Pofit 1,782,000 1,881,000 1,880,000 1,384,800 1,767,600 8,695,400
    Administrative Expenses
    Salaries(Meters) 769,186 655,233 398,837 299,128 327,616 2,450,000
    New Salaries(Meters) 284,884 213,663 142,442 113,954 113,953 868,895
    Additional Salaries 96,000 96,000 96,000 96,000 96,000 480,000
    Rent(Meters) 298,256 254,070 154,651 115,988 127,035 950,000
    New Rent(Meters) 110,465 82,849 55,233 44,186 44,186 336,919
    Sampling(Actual) 30,000 25,000 15,000 10,000 20,000 100,000
    New Sampling(Actual) 35,556 29,076 17,679 11,905 23,478 117,693
    Electricity(Meters) 122,442 104,302 63,488 47,616 52,151 389,999
    New Electricity(Meters) 45,349 34,012 22,674 18,139 18,139 138,314
    Telephone(Meters) 91,047 77,558 47,209 35,407 38,779 290,000
    New Telephone(Meters) 33,721 25,291 16,860 13,488 13,488 102,849
    Debt Recovery(Meters) 97,953 83,442 50,791 38,093 41,721 312,000
    New Debt Recovery(Meters) 36,279 27,209 18,140 14,512 14,512 110,651
    Maintainence(Meters) 28,884 24,605 14,977 11,233 12,302 92,001
    How would Amir go about making this decision based on a differential/incremental profit
    basis?

    Analysis of net profit

    25.21

    21.53
    19.97

    14.75

    10.75 10.19

    7.25
    6.22
    4.24

    1.21
    1 2 3 4 5
    What other financial and nonfinancial considerations should Amir consider in making this
    decision?

     The other financial and non-financial considerations to be considered are that of


    Transportation costs which as mentioned would double as the cloth would move to several
    locations which also adds up to a lot of time being consumed before the cloth is bought to
    the shop, which would also lead to delay in payments.
     Increase in the sampling costs, also when the cloth being send to an experienced person for
    quality check might reduce the bargaining power.
    Course of action recommended.

     It's in our strong beliefs that if Aamir seeks out to the discovery of these events, he and his
    team can evaluate accordingly. A major part of his theory must be put to test the
    authenticity of it. The possible outcomes can throw some light on the fact that more and
    more attention to increasing the sales would promptly give results and make up for the
    25% profit that he's earning in the discussed agendum.
     On the other hand, shrinking the costs might as well rig out to be wholesome in the long
    run.

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