Question
XYZ Mart's annual turns are 5, its Cost of Goods Sold (COGS) is $50.0 Billion, and its gross margin is 33%. Recall gross margin = [Revenue - COGS]/Revenue. What is the average inventory it holds in $ billion? (Just type the integer, no $ sign or any decimal points are required. If your calculations is $200.789 Billion, just type 201) You decided to run a food truck to serve customers during lunch by taking and making special burgers. Customers have only one choice during the lunch hour, since the objective is to maximize the number of customers served. Assume that each customer places just one lunch order, and all lunch orders are the same size-one unit of your special burger. The process of preparation of burger works in this manner. First, a batch of orders is by one person. The preparation depends upon the number of orders in the batch. The time to make just one order is 5 minutes. For each additional order in the batch, it takes 0.5 minutes more to prepare. Thus, preparing two orders in a batch takes 5.5 minutes, cooking three orders takes 6 minutes, and so on. The other process is bagging and accepting payments (done by a separate person). This step takes 0.80 minutes per order. Calculate the batch size (in orders) that will maximize the overall flow rate (assume there is ample demand)? (Give your answer in integer only, no decimal. If you need round up. For example, if you get 22.85 type 23) Fresh produce is an organic food retail chain, 'which operates 365 days a year. In 2015, the company turned its inventory approximately 30 times. The company's COGS were 60% of its Sales and its annual Sales were about $8000 M that year. What was Fresh produce's average inventory in 2015 (in $M)? (Round up to million dollars and just write integer for your answer. If you calculated $1000.75 million. Just type 1000)
Explanation / Answer
Total questions given is 3
Question 3 (As per screenshot given )
Turns per year = COGC / Average Inventory
So, Average Inventory = COGC / Turns per year
Average Inventory = $50 / 5 = $10 billion
Average Inventory is $10 billion
Question 4 ( As per screenshot given )
Capacity = 1/0.8 = 1.25 orders/minute
Setup time = 4.5 minute
Batch size = Capacity * Setup time / ( 1 - capacity * processing time )
Batch size = 1.25 * 4.5 / ( 1 - 1.25 * 0.5 ) = 15
Batch size = 15 units/batch
Question 5 ( As per screenshot given )
Inventory Turnover = 30
COGS = 60% of $8000 = $ 4800 million
Inventory Turnover = COGS / Average Inventory
Average Inventory = COGS / Inventory Turnover = $4800 / 30 = $ 160 million
Average Inventory = $ 160 million
