The following table shows financial data for Costco Wholesale and Walmart, two major U.S. retailers. Assume that

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The following table shows financial data for Costco Wholesale and Walmart, two major U.S. retailers.

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Assume that both companies have an average annual holding cost rate of 30 percent (i.e., it costs both retailers $3 to hold an item that they procured for $10 for 1 entire year).

a. How many days, on average, does a product stay in Costco’s inventory before it is sold? Assume that stores are operated 365 days a year.

b. How much lower is, on average, the inventory cost for Costco compared to Walmart of a household cleaner valued at $5 COGS? Assume that the unit cost of the household cleaner is the same for both companies and that the price and the inventory turns of an item are independent.

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