How many days on average does a product stay

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Reference no: EM131351768

The following table shows financial data (year 2004) for Costco Wholesale and WaIMart, two major U.S. retailers.

	Costco	WaIMart
	Wholesale (1 million)	Stores (1 million)
Inventories	$ 3,641	$29,447
Sales (net)	$ 48,106	$286,103
COGS	$41,651	$215,493

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 one 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 Wal-Mart 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.

Reference no: EM131351768

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