Question

The McDonald's fast-food restaurant on campus sells an average of 4,000 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 350 pounds of hamburger in stock. Assume that the hamburger patties cost $1.00 a pound.

Required:
a. What is the inventory turnover for the hamburger patties?
b. On average, how many days of supply are on hand?

Answer 1

The inventory turnover for the hamburger patties is 11.43 times per week. On average, there are 2 days of supply on hand.

Step-by-step explanation:

To calculate the inventory turnover for the hamburger patties, we need to find the ratio of the average weekly sales to the average inventory. The average weekly sales of quarter-pound hamburgers is 4,000, and the average inventory is 350 pounds. Therefore, the inventory turnover is:

Inventory turnover = Average weekly sales / Average inventory = 4,000 / 350 = 11.43 times per week.

To calculate the number of days of supply on hand, we need to find the average number of days the inventory lasts. Since the hamburger patties are resupplied twice a week, the average inventory represents 2 days of supply. Therefore, the number of days of supply on hand is 2 days.

Answer 2

a. 148.57 for the year.

b. 2.45 days

Step-by-step explanation:

a. Each hamburger patties cost $1.00 a pound and 4,000 quater pounds are supplied per week. 4 quater pounds make up 1 pound so;

= 4,000/4

= 1,000 pounds are supplied per week.

Inventory turnover = Cost of goods sold for the year/ Average Inventory

= ( Pounds per week * cost per pound * number of weeks in year)/ Average inventory

= ( 1,000 * 1 * 52) / 350

= 148.57 for the year.

b. Average Days of Supply = Average Inventory/cost of goods sold

= 350/( 1,000 * 1 * 52)

= 0.00673 per year

To convert to days multiply by;

= 0.006730 * 52 weeks * 7 days

= ‭2.44972‬

= 2.45 days