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# Increasing Order Fill Rates and Develop Strategic Profit Model

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Please see attached Case Study for Paper2Go.com and respond to the following Case Questions:
1. You are the logistics analyst at Paper2Go.com and have been asked to do the following:
a. Calculate the financial impact of increasing order fill rates to 98% from 92%.
b. Develop a strategic profit model of both the old system and the modified system that reflects the suggested adjustments.

Please cite any outside sources and fully explain (and show work for) order fill rate calculation and strategic profit model if applicable.

#### Solution Preview

Increasing Order Fill Rates and Develop Strategic Profit Model

Please see attached Case Study for Paper2Go.com and respond to the following Case Questions:
1. You are the logistics analyst at Paper2Go.com and have been asked to do the following:
a. Calculate the financial impact of increasing order fill rates to 98% from 92%.
b. Develop a strategic profit model of both the old system and the modified system that reflects the suggested adjustments.

Please cite any outside sources and fully explain (and show work for) order fill rate calculation and strategic profit model if applicable.

A. ) In order to calculate the Revenue and Profit for the order fill rate at 92%, the total number of orders 500,000 is multiplied by 92% to calculate the number of orders filled at 92% (460,000). Next, the total number of orders (500,000) is subtracted from the number of orders filled at 92% (460,000) is 40,000, which is the number of orders not filled on time. Finally, number of orders not filled on time (40,000) is multiplied by 85%, which is 34,000.

The revenue for orders filled on time is calculated by multiplying the Average Revenue per on Time Order (\$150) by the number of orders filled at 92%, which is \$69,000,000. The revenue for orders not filled on time is calculated by multiplying the Average Revenue per on Time Order (\$150) by the number of replenishment orders filled at 85% of not filled on time (34,000), which is \$5,100,000.
Papers2Go.com costs for each rehandled order is \$15. The total rehandling cost fee is calculated by multiplying the rehandled order fee (\$15) by the number of replenishment orders filled at 85% of not filled on time (34,000), which is \$510,000.

Papers2Go.com costs for each invoice reduction for rehandled orders per order is \$30. The total invoice reduction for rehandled orders fee is calculated by multiplying the Invoice reduction for rehandled order fee (\$30) by the number of replenishment orders filled at 85% of not filled on time (34,000), which is \$1,020,000.
The annual payment on the \$40,000,000 loan payment is calculated with the following formula: P = r(PV)/(1-(1+r)^-n) where P = Annual ...

#### Solution Summary

Determining the impact of increasing the order fill rate from 92% to 98%. Also, develop a strategic profit model to show the impact of increasing the order fill rate from 92% to 98%.

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