Problem
I. Andrew Manufacturing held an average inventory of $1.2 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.2 million, and its cost of goods sold was $5.0 million. The firm operates 295 days a year. What is the inventory days' supply? Do not round intermediate calculations. Round your answer to one decimal place.
i. Inventory days' supply (IDS): ___________ days
What target inventory level is necessary to reach a 25- and 15-day inventory days' supply during the next two years? Do not round intermediate calculations. Round your answers to the nearest dollar.
ii. Target inventory level (25-day): $ _________
iii. Target inventory level (15-day): $ ____________
II. As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $25.1 million, cost of goods sold of $19.9 million, 50 operating weeks a year, total average on hand inventory of $2,400,000, accounts receivable equal to $2,450,000, and accounts payable of $3,715,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.