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 $3,000,000. Genuine Reproductions (GR) plans on increasing next year’s sales by 20 percent while maintaining its average inventory in dollars of $250,000.

Calculate the expected inventory turnover for next year Inventory Turnover = inventory turns (Round your answer to 1 decimal place, the tolerance is +/-0.1.) LINK TO TEXT

Calculate the expected weeks of supply. Assume 52 weeks per year. Weeks of Supply = weeks of supply (Round your answer to 1 decimal place, the tolerance is +/-0.1.)

Explanation / Answer

Inventory turnover = Cost of goods sold / Average Inventory.

Projected cost of goods sold = Current x 1.20 = $3,000,000 x 1.20 = $3,600,000

Inventory turnover = $3,600,000 / $250,000 = 14.40 Times.

Weeks of Supply = 52 / Inventory Turnover = 52 / 14.40 = 3.61 weeks.

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