*HELPPP! Please don\'t copy and paste the answer on Chegg already, as it is inco
ID: 2747631 • Letter: #
Question
*HELPPP! Please don't copy and paste the answer on Chegg already, as it is incorrect. I continue to get 1.5 for the average inventory turnover which is also incorrect. HELPPPP!) *
The U.S. Airfilter company has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters are made in a single plant located in Louisville, Kentucky, in the United States. They are distributed to retailers through wholesale centers in 100 locations in the United States, Canada, and Europe. You have collected the following data relating to the value of inventory in the U.S. Airfilter supply chain:
(a) What is the average inventory turnover for the firm? (Round your answer to 1 decimal place.) Average inventory turnover 1.50
(b) If you were given the assignment to increase inventory turnover, what would you focus on?
(c) The company reported that it used $470M worth of raw material during the year. On average, how many weeks of supply of raw material are on hand at the factory?(Round your answer to 2 decimal places.)
*HELPPP! Please don't copy and paste the answer on Chegg already, as it is incorrect. I continue to get 1.5 for the average inventory turnover which is also incorrect. HELPPPP!) *
QUARTER 1(JANUARY
THROUGH
MARCH) QUARTER 2
(APRIL
THROUGH
JUNE) QUARTER 3
(JULY
THROUGH
SEPTEMBER) QUARTER 4
(OCTOBER
THROUGH
DECEMBER) Sales (Total Quarter): United States 300 380 380 360 Canada 75 70 90 70 Europe 28 34 23 15 Cost of goods
sold (total quarter) 265 275 335 340 Raw materials at
the Louisville plant
(end-of-quarter) 50 38 50 56 Work-in-process
and finished
goods at the
Louisville plant
(end-of-quarter) 90 98 111 140 Distribution center
inventory (end-of-quarter): United States 27 28 26 27 Canada 9 8 17 15 Europe 4 5 4 5
Explanation / Answer
a.
Cost of goods sold (Total year)
265+275+335+340 = 1215
Average aggregate inventory value (total year)
Raw materials: 50+38+50+56 = 194
WIP and finished goods: 90+98+111+140=439
Distribution Inventory: 40+42+43+51=176
105+475+176=756
Average inventory turnover = 1215 / 756 = 1.607
b. We should focus on average aggregate inventory value than cost of goods sold. Because we can control average aggregate inventory values easily by decreasing Distribution center or Work-in –Process.
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