Question

Mattress​ Wholesalers, Inc. is constantly trying to reduce inventory in its supply chain. Last​ year, cost of goods sold was ​$ million and inventory was ​$ million. This​ year, costs of goods sold is ​$ million and inventory investment is ​$ million. ​a) What was its weeks of supply last​ year? nothing weeks ​(round your response to two decimal​ places). ​b) What is its weeks of supply this​ year? nothing weeks ​(round your response to two decimal​ places). ​c) Is Mattress Wholesalers making progress in its inventory reduction​ effort? Since the number of weeks that cover the supply has ▼ decreased not changed increased ​, Mattress Wholesalers is making ▼ negative progress no progress progress in its​ inventory-reduction effort.

Answer 1

Answer:

A. Weeks supply= 10.7

B. Weeks supply= 9.53

C. Yes

DECREASED, PROGRESS

Explanation:

A. Calculation for last year’s weeks of supply

First step is to find the Average cost of sold good on week basis

Using this formula

Average cost of sold good on week basis =Cost of goods sold /Numbers of weeks in a year

Let plug in the formula

Average cost of sold good on week basis= $7.54 million/ 52

Average cost of sold good on week basis= $ 0.145 million

Last step is to find last year Weeks supply using this formula

Last year Weeks supply=Investment in inventory/ Average cost of sold good on week basis

Let plug in the formula

Last year Weeks supply=$1.46/0.145

Last year Weeks supply= 10.7

B. Calculation for weeks supply this year?

Using this formula

Average cost of sold good on week basis =Cost of goods sold /Numbers of weeks in a year

Let plug in the formula

Average cost of sold good on week basis= $8.62 million/ 52

Average cost of sold good on week basis= $ 0.165769 million

Last step is to find this year Weeks supply using this formula

This year Weeks supply=Investment in inventory/ Average cost of sold good on week basis

Let plug in the formula

This year Weeks supply=$1.58/0.165769

This year Weeks supply= 9.53

C. Yes, Mattress Wholesalers is making progress in its inventory reduction effort .

Since the numbers of weeks that cover the supply had DECREASED, Wholesalers is making PROGRESS in its inventory reduction effort