Monthly inventory turns and month-of-supply

Reference no: EM131780474

D&F reports annual sales of $20 million, cost of goods sold of $10 million, inventory of $5 million, and net income of $1 million. What is D&F’s monthly inventory turns and month-of-supply?

1. Company C&A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges Company C&A $30 per order and $50 per bottle. Company C&A’s annual holding cost percentage is 40%. Assume Company C&A operates 50 weeks in a year. What is Company C&A’s total ordering and holding cost per year if the order quantity is 200?

2. Restaurant A uses 60 bags of tomatoes each month. The tomatoes are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Restaurant A’s annual inventory holding cost percentage is 40%. If Restaurant A chooses to use the economic order quantity when placing an order for tomatoes, what are its ordering and holding costs per year expressed as a percentage of the annual purchasing cost?

3. Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 250. Store A purchases the product for $10 each unit and sells each for $30. Inventory is salvaged for $5. What is its expected profit if Store A’s order quantity is 400 units?

Reference no: EM131780474

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