Last year, RJT Enterprises had average inventories (raw materials, work-in-process, and finished goods) of $7.5 million. During this same year the cost of goods sold was $30 million. The company operates 50 weeks per year
a. What is their total inventory (measured as weeks of supply)?
b. What is their inventory turnover?
Weeks of supply = average aggregate inventory value/weekly sales at cost =
7.5 million/(30 million/50 ) = 12.5 weeks
Inventory turnover = annual sales (at cost)/average aggregate inventory value =
30 million/7.5 million = 4
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