David Berman Case Study Questions

The main character is concerned about the inventory levels of retail trade. Explores the relationship between the retail inventory and future revenues -., And, consequently, the relationship between the level of reserves and the stock price "

Inventory in retail sector:

The ratio of inventory turnover is the proportion of cost of goods sold to average inventory level. This ratio is used to measure the performance of inventory. For example best buy store, electronics retailer had ratio ranged from 2.85 to 8.53 during 1987 to 2000. Inventory turnover could be correlated with other measures such as the performance of retail stores can be accessed through the correlation of the inventory turnover and gross margins.

Return on equity is also a measure which is used to find out the relationship between capital intensity and inventory turns. Return on equity among retailers to be equivalent to higher gross margins would need to experience a change in inventory turnover.

Corporate Performance:

Corporate performance can be measured by identifying the link among inventory turnover, capital intensity and gross margins. Some measures do not vary systematically from one retail segment to another such as return on assets, sales growth, financial leverage or return on equity. Retailers with demands of grocery and convenience goods have better efficiency ratio rather than retailers of shoes, electronics and toys etc. There is an inverse relationship between gross margin and inventory turnover. A retailer who keeps units for longer periods expects to earn more on it than a retailer who keeps units for comparatively shorter period. If retailers belong to the same segment, they expect to achieve equivalent inventory productivity which is GMROI gross margin return on inventory investment.

When there is an investment in information technology, inventory and logistics management which involves capital investment then this is accounted as fixed assets. If there are two firms with the same business, have the same gross profit margin and same inventory turnover but different capital intensities then the company which has lower capital intensity has better inventory management systems.

John B, River

John B, River Clothiers, Inc. is a leading U.S. retailer of men’s tailored and casual clothing. The set-up includes physical store along with its catalogs and internet. Third party contracts are made for its specifications and designs. Their product line includes high-quality accessories for male from head to toe. Its popular brands are pants, vests, shirts, sportswear, etc. All products are marketed under John B. River except branded shoes. Its trend is the most important determinant of sales at its stores.

Earlier, in 21st Century people are more formal regarding their dresses at workplaces. On retail stores 80% of store space is reserved from which 20% is reserved for stocks and tailoring activities. As the business gives high value to its customers therefore, it has retail stores in different demographics and seven outlets that provide excess merchandise. In the year 2003, 11% of net sales and in 2002, 12% of net sales are were executed through internet and catalogs. The competitors of John B. River were Men’s Wear house Inc. and Brooks Brothers. Their planning is very supreme regarding information systems while conveying all relevant information to third parties or vendors. Around 24% of their supplies were purchased from U.S. suppliers and 15% from Mexico in 2003. There is a centralized distribution centre which receives the inventory and distributes it to warehouses or stores directly. Inventory is tracked by point of sales system and in the year 2004, $3 to $4 million was spent by the company to increase its capacity to serve 500 stores. The store had developed its five way strategy to achieve growth. First strategy is to increase the quality of products by focusing on designs and manufacturing. Second strategy is to expand its internet sales and catalog operations, third is to produce new products, fourth is to remove middle-men from distribution channel and fifth is to increase the high- level of service standards through high inventory levels.

David Berman Case Solution

To achieve its growth targets, the company planned to expand the business to 500 stores. In the year 2004 approx. 60 stores were opened and 75 to 100 were decided to opened during 2005 to 2008. The cost associated for the opening of stores is about $225,000 for fixtures, point of sale equipments and $350,000 for inventory levels for peak seasons. John B. River depends upon classic designs because customers demand classic styles.

John B. Rivers- Inventory valuation:

First time, the business used this method to value its inventory. It is noticed that if prices are increased, FIFO valuation generates higher net income than LIFO. John B. River’s inventory had been grown over past four years. Especially its inventory had higher growth rate than sales. The statistics include growth in sales by 23%and inventory by 54% in 2003. In 2004 sales grew by 24% while inventory by 4%. Day’s payables declined from 33% in 1998 to 27% in 2004..........

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by Ananth KR, Vishal Gaur, Saravanan Kesavan Source: Harvard Business School 19 pages. Publication date: April 12, 2005. Prod. #: 605081-PDF-ENG

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David Berman

[Allyson Van Houten] In 2009 David Berman released Do Good Design, a call to action that alerts designers to the role they play in persuading global audiences. Since then the book has sold out the first edition, has been translated into four different languages, with the rights to several more on the way, and has been used in many classrooms as a tool for teaching sustainability. Today we’re pleased to announce the release of the second edition is now available and was produced using Mohawk papers.  We asked David to answer a few questions about what he learned along the way and how choosing sustainable paper was important for this edition.

Your book is ready for a reprint in what feels like a pretty short amount of time. Congratulations!Why was it important for you to produce a printed edition of your book?
The future of civilization is our common design project. And as we now live in a time where everyone is a designer, we need to find a way to reach everyone with the message of where and how they fit in a sustainably designed future. Of course e-book distribution is rising, which is wonderful for strengthening universal access. Meanwhile, responsibly crafted paper continues to have many merits. Print provides expression, access, permanence, reach and focus not always available in electronic media.

Why did you choose to use Mohawk papers for the reprint?
We needed papers for this book with great surface qualities, high post-consumer waste content, FSC certification so we turned to our neighbours just across the St. Lawrence at Mohawk, not just for their expertise, but for their history and commitment to sustainable design. They were the first American commercial paper manufacturer to match 100% of their electricity with wind power renewable energy credits.

Tell us a little bit about why you chose Mohawk Options and Mohawk Everyday Digital.
We really wanted the feel of a hardcover book, but in a light and convenient airplane read. So for the interior, we sought out the vellum texture in a 100% post-consumer stock with strong opacity. We found all of that, without compromise, in Mohawk Options. For the cover we were seeking great performance for the embossment, the heavy red ink coverage, and the folding of the flaps that were added to this edition. Mohawk Everyday Digital was an excellent choice. We like the name too! Every day design and designers doing extraordinary things!

What are some lessons you learned in the process of printing the first edition in 2009 that you applied during the creation of the new edition?
Our largest lessons were technical. Many of the photos I took in my travels for the book were taken under far-from-optimal conditions, and everyone helped us add tonal range to photos that started with very little. The production manager at Mohawk, Pam McGuire, worked with our printer to get the best production quality from the images.

We also used vegetable-based inks, and optimized the page imposition to minimize waste (using suctioning for all trim, and recycling of all waste paper and plates). Our bleeds did not cause additional paper use, due to the shaving required by the finishing process.

Were there any challenges with your publisher in changing the paper for this edition?
We’re really proud to be working with the dedicated team at Peachpit and Pearson. We all recognized that the original edition of the book suffered from the mix of paper, photo quality, and ink. And so Peachpit really stepped up to make sure that this edition is exemplary of the balance that’s possible when words, images, sustainable stocks, and responsible printing techniques combine.

What are some ways your book is being used? Classroom text, etc. Do you have any ideas on other ways your books is being used?
Many design schools are using the book for core curricula and reading lists, as sustainability becomes how we roll as a profession. We’re also creating a Wiki a classroom guide. Most satisfying is when I get an email from an instructor who says that the book inspired a project: that having students read the book inspired them to take a certain action in their community to make a difference. That’s absolutely the best. It’s especially exciting when people realize that the book is not just for designers: that all professionals can benefit from what becomes possible.

How many languages was the original edition printed in, will there be new languages available for the new edition?
The original edition was published in English, Simplified Chinese, Indonesian, Korean, and braille. The rights of the Russian edition have been sold, and there are specific groups making plans for French, Spanish, and Malay editions… it’s all very exciting that a simple message could find such reach: “Don’t just do good design, do good!”

How did your work as the Sustainability Chair for Icograda affect the content of your book, if at all?
I’m working diligently with the jury of the Icograda global sustainability standard as we develop the mandatory and rated items we’ll be using for what will become the equivalent of LEED certification for communication design projects. So as we were working on the book, I was thinking “How many points would this project earn?”. I’m looking forward to when every designer will have that measurement standard in the back of their minds while they plan and create.

Same question for your involvement in AIGA.
It was Ric Grefe who first suggested, on a street corner in Seattle, that Do Good Design be published as an AIGA Press title. And it was Ric who invited me to help edit the AIGA Rules of Professional Conduct to embrace social responsibility … which ultimately led to those thoughts becoming a template for over half a million design students in China! It’s another example of how it doesn’t take many people to ripple substantial change.

For Felt & Wire readers only, Peachpit is offering 35% off the latest edition of Do Good Design! Just visit Peachpit online and enter DGDEarth at checkout.

David Berman is a high-level advisor with the United Nations on how design can be used to help fulfill the Millennium Development Goals. He is a strategic consultant with 30 years of experience in graphic, interface, and universal design.He has traveled to 50 countries as an expert speaker, serves as the Ethics Chair for graphic design in Canada, Chair for Accessible Technology at Carleton University, and as Sustainability Chair of Icograda, the world body for graphic design. Clients include IBM, the International Space Station, the Sierra Club, and Canada’s largest federal government departments.

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