Practical Management Science
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ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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I need question D solved please
(a) What was their average aggregate inventory value? =46,410,239
(b) What was their average inventory (measured in weeks of supply)? =6.97
(c) What was their inventory turnover?=7.1771
BIT operates on a build-to-stock policy, and therefore stores its finished
goods in a warehouse capable of housing up to 70,000 units. Its annual overhead cost (fixed cost) is $117,000; and it costs $3/unit to house the finished goods. BIT has been approached by a warehouse company offering to house the finished goods for a unit cost of $4.5/unit, with an annual contract cost of $30,000.
(d) Should BIT continue operating its own warehouse, or should it employ
the warehouse company? Why?
Transcribed Image Text:BIT Electronics is a manufacturer of computer components. Last year,
BIT had average inventories as described in the following table:
# of units unit cost ($)
29,500
raw material 1
18.50
raw material 2
37,500
13.20
raw material 3
work-in-process 1
work-in-process 2
work-in-process 3
work-in-process 4
finished goods
1,250,300
11.65
4,850
56.75
2,950
62.25
6,120
100.85
5,690
92,850
84.30
315.00
The company operates 50 weeks/year, with annual sales of $322.85 million.
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