Mattress Wholesalers, Inc. is constantly trying to reduce inventory in its supply chain. Last year, cost of goods sold was $7.46 million and inventory was $1.51 million. This year, costs of goods sold is $8.59 million and inventory investment is $1.61 million. a) What was its weeks of supply last year? 10.53 weeks (round your response to two decimal places). b) What is its weeks of supply this year? 9.75 weeks (round your response to two decimal places). c) Is Mattress Wholesalers making progress in its inventory reduction effort? Since the number of weeks that cover the supply has decreased , Mattress Wholesalers is making progress in its inventory-reduction effort.

(A)

we are given for last year

cost of goods sold was $7.5 million and inventory was $1.5 million

firstly, we will find average cost of sold good on week basis

=cost of goods / total number of weeks in a year

so, we get

average cost of sold good on week basis as:

=/frac{7.5}{52} = 0.1442 million

now, we can find weeks supply

Weeks supply=Investment in inventory / Average cost of sold good on week basis

week supply = 1.5/0.1442 = 10

so, week supply = 10 ... Answer

(B)

we are given for this year

cost of goods sold is $8.6 million and inventory investment is $1.6 million

firstly, we will find average cost of sold good on week basis

=cost of goods / total number of weeks in a year

so, we get

average cost of sold good on week basis as:

=/frac{8.6}{52} = 0.1654 million

now, we can find weeks supply

Weeks supply=Investment in inventory / Average cost of sold good on week basis

week supply = 1.6/0.1654 = 10

so, week supply = 10 ... Answer

(C)

yes, reduced by 7%