John runs a chain of grocery stores in Colorado. He has just heard a weather report that a storm is headed for his area a few days from now. What should John do to ensure that the goods he needs for his stores are delivered despite the bad weather?
What will be an ideal response?
John's business depends on a supply chain, that is, the products he needs move through a chain of suppliers, manufacturers, and wholesalers before they arrive at his stores. Since John has advance warning of the storm, he could contact his wholesalers to request delivery of needed products at an earlier time or increase his usual order to compensate for the days when the wholesalers may be unable to deliver because of bad weather. In either case, John's requests of his wholesalers may have an impact on other parts of his supply chain, for example, perhaps requiring that his wholesalers communicate with product manufacturers about increasing their delivery of goods to the wholesalers.
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Tweedle Corporation's most recent balance sheet and income statement appear below:Balance SheetDecember 31, Year 2 and Year 1(in thousands of dollars)AssetsYear 2Year 1Current assets: Cash$140 $130 Accounts receivable, net 200 210 Inventory 150 180 Prepaid expenses 20 20 Total current assets 510 540 Plant and equipment, net 950 910 Total assets$ 1,460 $ 1,450 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$130 $150 Accrued liabilities 70 70 Notes payable, short term 70 60 Total current liabilities 270 280 Bonds payable 170 190 Total liabilities 440 470 Stockholders' equity: Common stock, $1 par value 200 200
Additional paid-in capital 320 320 Retained earnings 500 460 Total stockholders' equity 1,020 980 Total liabilities & stockholders' equity$ 1,460 $ 1,450 Income StatementFor the Year Ended December 31, Year 2(in thousands of dollars)Sales (all on account)$1,190 Cost of goods sold 710 Gross margin 480 Selling and administrative expense 226 Net operating income 254 Interest expense 25 Net income before taxes 229 Income taxes (30%) 69 Net income$ 160 The times interest earned ratio for Year 2 is closest to: A. 10.16 B. 14.51 C. 9.16 D. 6.40