From \"Matching Supply with Demand\" Cachon/Terwiesch - Q2.3 (Inventory Cost) A

Question

From "Matching Supply with Demand" Cachon/Terwiesch - Q2.3

(Inventory Cost) A manufacturing company producing medical devices reported $60,000,000 in sales over the last year. At the end of the same year, the company had $20,000,000 worth of inventory of ready-to-ship devices.

a. Assuming the units in inventory are valued (based on COGS) at $1000 per unit and are sold for $2000 per unit, how fast does the company turn it's inventory? The company uses a 25 percent per year cost of inventory. That is, for the hypothetical case that one unit of $1000 would sit exactly one year in inventory, the company charges its operations division a $250 inventory cost.

b. What - in absolute terms- is the per unit inventory cost for a product that costs $1000?

Explanation / Answer

From "Matching Supply with Demand" Cachon/Terwiesch - Q2.3 (Inventory Cost) A

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.