Cyberphone, a manufacturer of cell phone accessories, ended the current year with annual sales (at cost) of $48 million. During the year, the inventory of accessories turned over six times. For the next year, Cyberphone plans to increase annual sales (at cost) by 25 percent.
a. What is the increase in the average aggregate inventory value required if Cyberphone maintains the same inventory turnover during the next year?
b. What change in inventory turns must Cyberphone achieve if, through better supply chain management, it wants to support next year's sales with no increase in the average aggregate inventory value?