Question

Mattress Wholesalers, Inc., is constantly trying to reduce inventory in its supply chain. Last year, cost of goods sold was $7.5 million and inventory was $1.5 million. This year, cost of goods sold is $8.6 million and inventory investment is $1.6 million. A) What were the weeks of supply last year?

Answer 1

The weeks of supply last year for Mattress Wholesalers, Inc. were 10.4 weeks, a calculation based on their inventory and cost of goods sold.

Step-by-step explanation:

The week of supply is a metric used in supply chain management that measures the number of weeks a company's current inventory will last be based on the cost of goods sold. To calculate the weeks of supply for Mattress Wholesalers, Inc. from last year, we divide the inventory level by the cost of goods sold, and then multiply by 52 weeks (since there are 52 weeks in a year).

Last year's calculation:

1. Divide the inventory by the cost of goods sold: $1.5 million / $7.5 million = 0.2.
2. Multiply the result by 52 weeks: 0.2 * 52 weeks = 10.4 weeks.

Therefore, the weeks of supply last year for Mattress Wholesalers, Inc. were 10.4 weeks.