Champion Cooling Company remanufactures window air conditioners during the off-season months for sales during the scorching months of June, July, and August in the Oklahoma City area
Their average inventory of air conditioners is shown in the following table. The company operates 50 weeks a year and has average weekly sales of $3,750 and expects to sell $135,000 worth of product in a year.
Unit Type Avg. Inventory
(at cost) Value of Each
110 Volts 65 $250
18,000 BTU or smaller 220 Volts 90 $350
Larger than 18,000 BTU 50 $500
a. What is their average aggregate inventory value?
b. What is their total inventory (measured as weeks of supply)?
c. What is their inventory turnover?
a. Avg Aggregate Inventory Value =
Avg Aggregate Inventory Value = 65 × $250 + 90 × $350 + 50 × $500 = $72,750
b. Weeks of Supply =
Weeks of Supply = = 19.4 ≈ 20 weeks
c. Inventory Turnover =
Inventory Turnover = = 1.86
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