Question

The McDonald's fast-food restaurant on campus sells an average of 4,000 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 350 pounds of hamburger in stock. Assume that the hamburger patties cost $1.00 a pound.
Required:
a. What is the inventory turnover for the hamburger patties?
b. On average, how many days of supply are on hand?

Answer 1

Answer:

a. 148.57 for the year.

b. 2.45 days

Explanation:

a. Each  hamburger patties cost $1.00 a pound and 4,000 quater pounds are supplied per week. 4 quater pounds make up 1 pound so;

= 4,000/4

= 1,000 pounds are supplied per week.

Inventory turnover = Cost of goods sold for the year/ Average Inventory

= ( Pounds per week * cost per pound * number of weeks in year)/ Average inventory

= ( 1,000 * 1 * 52) / 350

= 148.57 for the year.

b. Average Days of Supply = Average Inventory/cost of goods sold

= 350/( 1,000 * 1 * 52)

= 0.00673 per year

To convert to days multiply by;

= 0.006730 * 52 weeks * 7 days

= ‭2.44972‬

= 2.45 days