A company that sells 60 units of product in a given year and has an average quantity on hand of 10 units. There are 360 selling days and 261 production days in the year. The company has on hand how many days of product inventory?
A company that sells 60 units of product in a given year and has an average quantity on hand of 10 units. There are 360 selling days and 261 production days in the year. The company has on hand how many days of product inventory?
To determine the number of days of product inventory a company holds, we need to calculate the inventory turnover days. The average daily demand can be found by dividing the total annual sales by the number of selling days. In this case, the company sells 60 units in 360 selling days, which gives an average daily demand of 60 / 360 = 0.167 units per day. The company has an average quantity on hand of 10 units. To find the number of days of inventory, divide the average quantity on hand by the average daily demand: 10 / 0.167 ≈ 60 days. Thus, the company has 60 days of product inventory.
Answer C is correct: It is about the production days, not the selling days. Therefore the formula looks like this: 261/60 = 4.35 days to produce one unit 4.35 * 10 = 43.5 days worth of produced goods are in their inventory
Anybody got any idea what's going on here? lol
10/60*360
Shouldn't answer be 1.67 here? 10*(60/360)
= 10 units / (60 units / 360 days) = 10 units / (0.1667 units/day) = 60 days So the answer is C.
Average daily demand = Total annual demand / Number of selling days Average daily demand = 60 units / 360 days Average daily demand = 0.167 units per day Inventory days of supply = Average quantity on hand / Average daily demand Inventory days of supply = 10 units / 0.167 units per day Inventory days of supply = 60 days