Question

Mattress​ wholesalers, inc. is constantly trying to reduce inventory in its supply chain. last​ year, cost of goods sold was ​$7.47 million and inventory was ​$1.47 million. this​ year, costs of goods sold is ​$8.59 million and inventory investment is ​$1.56 million. ​a) what was its weeks of supply last​ year? 4 weeks ​(round your response to two decimal​ places). ​b) what is its weeks of supply this​ year? 4 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 not changed not changed increased decreased ​, mattress wholesalers is making negative progress progress negative progress no progress

Answer 1

Its weeks of supply last​ year was = 10

Explanation:

we are given for last year

cost of goods sold was $7.5 million and inventory was $1.5 million

firstly , we will find average cost of sold good on week basis

=cost of goods / total number of weeks in a year

so, we get

average cost of sold good on week basis as :

7.5 by 50 = 0.1442 million

now, we can find weeks supply

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

week supply = 1.5 by 0.1442 =10

so, week supply = 10

we are given for this year

cost of goods sold is $8.6 million and inventory investment is $1.6 million

firstly , we will find average cost of sold good on week basis

=cost of goods / total number of weeks in a year

so, we get

average cost of sold good on week basis as :

=8.6 by 52 = 0.1654 million

now, we can find weeks supply

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

week supply = 1.6/0.1654 =10

so, week supply = 10