Question

Jack​ Jones, the materials manager at Precision​ Enterprises, is beginning to look for ways to reduce inventories. A recent accounting statement shows that the inventory investment for raw materials is ​$4,029,400​, for​ work-in-process is ​$6,643,000​, and for finished goods is ​$2,994,000. This​ year's cost of goods sold will be about ​$18,564,000. Assume that there are 52 business weeks per year. Express the total inventory as weeks of supply.

Answer 1

week of supply 38.38

Step-by-step explanation:

cost of goods sold: 18,564,000

total inventory:

4,029,400 + 6,643,000 + 2,994,000 = 13.666.400‬

13,666,400 / 18,564,000 = 0,7361775479422538

We have inventory for 0.7362 of a year we have to convert this into weeks to determinate the week of supply:

365 days per year / 7 days a week = week per year

then we multiply that amount for our ratio:

week per year x 0.7362 = 38.38

Answer 2

1.47 weeks

Step-by-step explanation:

Precision Enterprises

Average aggregate inventory value=Raw materials + WIP + Finished goods

=$4,029,400 + $6,643,000

+$2,994,000 = $13,666,400

Weeks of supply

Sales per week=Cost of goods sold/52 weeks per year

=$18,564,000/52

=$9,282,000

Weeks of supply

=Average aggregate inventory value/Weekly sales

=$13,666,400/$9,282,000

=1.47 weeks

Therefore the total inventory as weeks of supply will be 1.47weeks