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5 December, 10:39

Jack Jones, the materials manager at Precision Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is $4,029,400 , for work-in-process is $6,643,000 , and for finished goods is $2,994,000. This year's cost of goods sold will be about $18,564,000. Assume that there are 52 business weeks per year. Express the total inventory as weeks of supply.

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  1. 5 December, 11:45
    0
    week of supply 38.38

    Explanation:

    cost of goods sold: 18,564,000

    total inventory:

    4,029,400 + 6,643,000 + 2,994,000 = 13.666.400‬

    13,666,400 / 18,564,000 = 0,7361775479422538

    We have inventory for 0.7362 of a year we have to convert this into weeks to determinate the week of supply:

    365 days per year / 7 days a week = week per year

    then we multiply that amount for our ratio:

    week per year x 0.7362 = 38.38
  2. 5 December, 12:19
    0
    1.47 weeks

    Explanation:

    Precision Enterprises

    Average aggregate inventory value=Raw materials + WIP + Finished goods

    =$4,029,400 + $6,643,000

    +$2,994,000 = $13,666,400

    Weeks of supply

    Sales per week=Cost of goods sold/52 weeks per year

    =$18,564,000/52

    =$9,282,000

    Weeks of supply

    =Average aggregate inventory value/Weekly sales

    =$13,666,400/$9,282,000

    =1.47 weeks

    Therefore the total inventory as weeks of supply will be 1.47weeks
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