Yorkville University - BUSI 2113

BUSI 2113 Production and Operations Management Unit 8 Exercise

1)a)

Inventory turnover = Cost of goods sold/Inventory investment

b)

% Inventory = (Total inventory investment/ Total assets) x 100

c)

The industry leaders are at 8%, whereas Bakers is at 7.53%. The industry leader’s performance is 0.47% more than Bakers, which means that Bakers performance is very low when compared to the industry performance.

2.

Average Inventory Turnover of industry = 14 times

Organic Grocers Average turnover = $10.5 million/ $1.0 million = 10.5

In other words, inventory turnover refers to the number of times a firm replenishes its inventory to achieve its sales or output or production level. Higher the inventory turnover, the better. This is due to needing to maintain less average inventory and less cash flow tied up in inventory.

a)

When profit is $25,000, it is increased by 10,000 over supply chain strategy (15000 profit), cost of material decreases by equivalent amount

b)

New profit = 25000 Fixed cost = 10,000

Now, Fixed cost + Profit = 20% of sales

3.

a)

Probability of all 3 getting disrupted

b)

=Probability of a super event+ Probability that all 3 get disrupted "uniquely"

c)

Total purchasing & transport cost + Probability of disruption x Loss on disruption

d)

Total purchasing cost & transport cost + Probability of disruption x Loss on disruption