Fry Distributing Corporation likes to track inventory by using weeks of supply a

Question

Fry Distributing Corporation likes to track inventory by using weeks of supply as well as by inventory turnover. (a) What is its week of supply? (b) What percent of Fry’s assets are committed to inventory? (c) What is Fry’s inventory turnover? (d) Is Fry’s supply chain performance, as measured by these inventory metrics, better than that of Cook in Part I? Explain.

TABLE FOR PARTS I and II Fry Distributing Corporation Net revenue $16,500 Cost of sales $13,500 Inventory $ 1,000 Total Assets $ 8,600 Cook Manufacturing Net revenue $27,500 Cost of sales $21,500 Inventory $ 1,250 Total Assets $16,600 For full

Explanation / Answer

Fry Distributing Cook Manufacturing Inventory turnover = COGS / AAIV = 13500 / 1000 = 21500 / 1250 13.5 17.2 Weeks of supply = (AAIV/COGS) x 52 weeks = 52 weeks / turnover = 52 / 13.5 = 52/17.2 3.85 3.02 Percent of Assets Committed to Inventory = Inventory / Total Assets = 1000 / 8600 = 1250 / 16600 11.63% 7.53% No Cook's Supply Chain is better than Fry as it has higher Inventory turnover and Weeks of Supply and lower per cent of assets are committed to Inventory

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