A company has supplied the following data with respect to its three different types of fertilizers: Calculate
Question:
A company has supplied the following data with respect to its three different types of fertilizers:
Calculate (assuming 50 sales weeks annually):
a) The inventory turnover and weeks of supply for each fertilizer.
b) The average inventory turnover and average weeks of supply.
FERTILIZER 10-10-10 16-16-16 20-10-5 ANNUAL DEMAND SACKS 30,000 20,000 10,000 AVERAGE INVENTORY SACKS 5,000 3,000 2,000 COST PER SACK € 18 15 20
Step by Step Answer:
Inventory Turnover Cost of Goods Sold Average Inventory Inventory Turnover f...View the full answer
Operations Management Sustainability And Supply Chain Management
ISBN: 9780135173626
13th Edition
Authors: Jay Heizer, Barry Render, Chuck Munson
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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