Aimee Birnbaum
Management Information Systems
Executive Report
CurryRUs.com is a company, based in India, which manufactures curry sauce. After
analyzing two different budget models for the coming year, it has been determined that the
first budget model will be more profitable for the company.
According to the original budget model, the price will stay at a constant rate of $11.
Demand, translating into sales, will be constant for the first few months, followed by a five
percent incremental monthly increase beginning in June. There are a portion of fixed expenses
which stay at a constant rate, regardless of sales and production, and certain variable expenses
which fluctuate depending on the production taking place that month. The result of the
decision support system was that profit will begin at a low rate, decreasing a little each month,
followed by a sharp uphill increase in June which continues until December. The cause of such a
drastic increase is probably the fact that sales begin to increase at exactly the same time. With
every increase in sales, the fixed costs are offset even more, and the profit is able to increase as
well. good
Another factor involved is the inventory carrying cost. The higher the month’s ending
inventory, the more money the company must pay for maintaining that inventory. As the year
progresses and the inventory level begins to dwindle due to increased sales and constant
production, the less the company must pay for inventory upkeep. CurryRUs needs to determine
a proper level of inventory that will be able to satisfy all customer demands and provide a
cushion in case additional unforeseen orders are placed. However, it should take heed that the
inventory level not become too high, lest the company be forced to pay a portion of their
would-be profits for inventory carrying costs. Good
While the second budget system attempts to fix the level of inventory by decreasing the
demand each month, it does not take into account that the company will be left with high
levels of ending inventory resulting in extra fees each month. By examining the anticipated
profit under the second system, it is apparent that the numbers are much lower. This is a direct
result of lower sales and higher inventory. Though the company anticipated this partially and
Aimee Birnbaum
Management Information Systems
increased prices as a result, the new price level was not enough to offset the other costs
involved. If the company truly anticipates demand decreasing rapidly each month, it must
increase the price to be able to offset many of the fixed costs and provide the company with a
respectable profit at the end of the year. Though it may be true that CurryRUS cannot
completely anticipate demand and costs for the year, the budget should reflect a significant
effort for reasonable year long profits. CurryRUS should therefore set out to determine a
method of maintaining inventory which seeks to pinpoint the minimum amount necessary to
fulfill all orders and be able to act as a cushion while not maintaining excess levels of inventory.
After straightening out this factor, CurryRUS should be able to anticipate high levels of profit in
the coming year.