The McDonald\'s fast-food restaurant on campus sells an average of 3,200 quarter

Question

The McDonald's fast-food restaurant on campus sells an average of 3,200 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 540 pounds of hamburger in stock. Assume that the hamburger patties cost S4 a pound and there are 52 weeks in a year a. What is the inventory turnover for the hamburger patties? (Round your answer to 2 decimal places.) Inventory turnover b. On average, how many days of supply are on hand? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Average days of supply per year

Explanation / Answer

Understand , I have to solve only first part of the problem which is unanswered :

Annual demand of Hamburger = 3200 / week x 52 weeks = $166400

Annual value of Hamburger = $4/ unit x 166400

Weekly demand of Hamburger = 3200 and it is supplied twice a week.

Therefore , order quantity ( Cycle inventory ) = 3200 / 2 = 1600

Therefore , average cycle inventory = 1600 /2 = 800

Therefore , average inventory = Average cycle inventory + Buffer stock at store = 800 + 540 Pounds = 1340 Pounds

Annual value of average inventory = $4 x 1340

Therefore, Inventory turnover for Hamburger Patties

= Annual value of Hamburger / Annual value of average inventory

= ( 4 x 166400 ) / ( 4 x 1340 )

= 124.18 ( rounded to 2 decimal places )

INVENTORY TURNOVER = 124.18 PER YEAR

Average days of supply

= Average inventory /Daily demand

= 1340 / ( 3200/7)

= ( 1340 x 7 ) / 3200

= 2.93

AVERAGE DAYS OF SUPPLY = 2.93 DAYS

INVENTORY TURNOVER = 124.18 PER YEAR

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.