Question

Assume that both companies have an average annual holding cost rate of 20% (i.e. it costs both retailers $2 to hold an item for one entire year that they procured for $10). How many days, on average, does a product stay in Save-A-Lot’s inventory before it is sold? Assume that stores operate 365 days a year.

Answer 1

To calculate the average number of days a product stays in Save-A-Lot's inventory before it is sold, we can use the formula:

Average inventory days = 365 / 2

Assuming an annual holding cost rate of 20%, a product stays in Save-A-Lot's inventory for an average of 182.5 days before it is sold.

Step-by-step explanation: