Joe, the owner of Genuine Reproductions (GR), a company that manufactures reprod

Question

Joe, the owner of Genuine Reproductions (GR), a company that manufactures reproduction furniture, is interested in measuring inventory effectiveness. Last year the cost of goods sold at GR was $2,500,000. The average inventory in dollars was $270,000.

Calculate the inventory turnover for GR.
Inventory Turnover =

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Calculate the weeks of supply. Assume 52 weeks per year.
Weeks of Supply =

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Calculate the days of supply. Assume that GR operates 4 days per week.
Days of Suply =

Joe, the owner of Genuine Reproductions (GR), a company that manufactures reproduction furniture, is interested in measuring inventory effectiveness. Last year the cost of goods sold at GR was $2,500,000. The average inventory in dollars was $270,000.

Explanation / Answer

Inventory Turnover = COGS/average inventory =2500000/270000=9.26

Weeks of Supply =52/9.259 =5.62

days of supply =4*5.62=22.46 days

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