DTKs Kidzone is a clothing manufacturer based in the United Kingdom. The CEO has decided to reconfigure the supply chain in order to cope with growing customer demands and to take advantage of potential cost savings overseas. The manufacturing operations are being moved to China while some distribution centres are moved to Eastern Europe to provide better service to a growing market there. While these changes are being made, the CEO is targeting an improvement on stock-holding costs and has requested some data on inventory turnover. The following data has been provided for the previous year trading. Production materials $1,360,000 Work in progress 3,250,000 Finished goods 5,010,000 The total cost of goods sold last year was $25 million. The industry average for inventory turnover is 3.1. You are to prepare a report for the CEO outlining how DTKs Kidzone compares to other companies in the industry. In the report, you need to discuss the following topics: 1) Outline how DTKs Kidzone could improve their inventory turnover.

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To analyze DTKs Kidzones inventory turnover and suggest improvements we first need to calculate their inventory turnover ratio using the formula Inven... View the full answer