Using the data in Problem 38, assume the operating manager reduces total average inventory on-hand by 21 percent by using better operations and supply chain methods. What is the revised cash-to-cash conversion cycle in weeks? What does this change in the cash-to cash conversion cycle mean?

Problem 38

As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. What do you conclude? What recommendations can you make to improve performance?