Question: The efficiency of an inventory system is often measured by the turnover ratio.(TR), defined by TR = Cost of goods sold per year / Average

The efficiency of an inventory system is often measured by the turnover ratio.(TR), defined by TR = Cost of goods sold per year / Average value of on hand inventory

a. Does a high turnover ratio indicate an efficient inventory system?

b. If the EOQ model is being used, determine TR in terms of K, D, h, and Q.

c. Suppose that D increases. Show that TR will also increase. Does this make intuitive sense?

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