ormatce Problems 115118 relate to Measuring Supply Chain Per

ormatce Problems 11.5-11.8 relate to Measuring Supply Chain Per

a) Inventory turnover = Net Sales/Average inventory

Net Sales = 75*10000 = 750000

Average inventory = 1600*50+1600*50*0.2 = 96000

Inventory turnover = 750000/96000 = 7.8125

b) Weeks of supply

Sales for 52 weeks = 10000 units

Sale for 1 week = 10000/52

Average inventory = 1600 units

Weeks of supply = Average inventory/Sales for 1 week

= 1600*52/10000=8.32

c) Annual gross profit = 10000*(75-50)-1600*.2*50 = 250000-16000=234000

d) Average investment in stock = 10000*50+1600*50*.2 = 516000

e)Annual inventory carrying cost = 1600*50*0.2 = 16000

If the average stock is reduced to 1000 units. inventory carrying cost would be reduced. Yes, company would operate more efficiently