Their inventory turnover is: A) 1.13 turns. They operate 51 weeks a year and each week average 3 million in sales (at cost). Who are the experts Experts have been vetted by Chegg as specialists in this subject. Buy CHAPTER 12: SUPPLY CHAIN DESIGN 42) Padco averages 15 million worth of inventory in all of its worldwide locations. Inventory Turnover is a metric showing how effectively a company converts its inventory into sales, reflecting inventory management efficiency. C&A has monthly turns of 4, cost of goods sold of 12 million, and revenue of 36 million. Inventory turns increased from 12 in 2000 to 16 in 2001. Our high inventory turnover means we maintain relatively low levels of investment in inventory480 million at year end on a sales base of nearly 7 billion.
The company’s cost of beginning inventory was 600,000 and the cost of ending inventory was 400,000. has a cost of goods sold of 5M for the current year. This means under the first approach, inventory turns 40 times a year and is on hand approximately nine days. Operations Management questions and answers. Gross margin 20 Inventory turns 8x Return on Inventory Investment (20 x 8). Inventory Turnover Ratio (Cost of Goods Sold)/(Average Inventory) For example: Republican Manufacturing Co. Figure shows the breakout of raw materials, work-in-process, and finished goods inventories. Translate this into days by dividing 365 by inventory turns. The Eagle Machine Company averaged 2 million in inventory last year, and the cost of goods sold was 10 million. inventory (5 mill) 3 per year / 12 0.25 per month. What is its average inventory 0.9 million.
C&A has annual turns of 10, cost of goods sold of 9 million, and revenue of 20 million. Using the first equation, the company has an inventory turnover of $1 million divided by $25,000 in average inventory, which equals 40 turns per year. What are C&As weekly inventory turns (assuming demand occurs. Watch this video to learn more about inventory turns and what is considered a typical inventory turn for this industry.“Approach 1: Sales Divided By Average InventoryĪs an example, assume company A has $1 million in sales and $250,000 in COGS. Conversely, a slow inventory turn suggests that a store owner may be trying to run a museum instead of a vibrant music store. This analytical tool to measure inventory productivity should be important to everyone in the industry for many reasons. For the retailer, a better inventory turn usually indicates inventory is “fresher” which, in turn, creates a happier customer and more customer traffic on the sales floor. For the supplier, high inventory turns can mean greater purchases from their music store customer. This, in turn, helps suppliers meet sales quotas and grant purchase discounts to the retailers. The Value of Understanding Inventory Turns
In simple terms, "inventory turns" refers to the number of times you sell your entire inventory, in dollars, over a 12-month period. Your inventory turnover is calculated by dividing your cost of goods sold by the amount of average dollars invested in inventory over the same 12-month period. This inventory management indicator is becoming an even bigger issue in music retailing because of the immediacy of product offered to online shoppers. Trying to stock all things for everyone is not only nearly impossible, it causes inventory turns to decrease which, in turn, hinders the vital cash flow needed to run the business.