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If your annual turnover rate is 4 times, which inventory stock level method would you use and why? Basic stock is good if less than 6 times a year or if.

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Presentation on theme: "If your annual turnover rate is 4 times, which inventory stock level method would you use and why? Basic stock is good if less than 6 times a year or if."— Presentation transcript:

1 If your annual turnover rate is 4 times, which inventory stock level method would you use and why? Basic stock is good if less than 6 times a year or if sales are erratic. Need a given level of inventory at all times, and a safety stock. Easily adjusted to accommodate the unexpected.

2 The Corner Hardware Store is attempting to develop a merchandise budget for the next 12 months. To assist in this process, the following data have been developed. The target inventory turnover is 4.8 and forecast sales are: Basic Stock Method Average Stock = Sales/turnover = 374k/4.8 = 77, Basic stock = 77, , = 46,749 B.O.M. = 46, k = 73,749 = 46, k = 72,749 = 46, k = 66,749 = 46, k = 80,749 = 46, k = 87,749 = 46, k = 86,749 = 46, k = 74,749 = 46, k = 73,749 = 46, k = 84,749 = 46, k = 85,749 = 46, k = 72,749 = 46, k = 74,749 Month Forecast Sales 1 $27, , , , , , , , , , , , ,000

3 The Corner Hardware Store is attempting to develop a merchandise budget for the next 12 months. To assist in this process, the following data have been developed. The target inventory turnover is 4.8 and forecast sales are: Percentage Variation Average Stock = Sales/turnover = 374k/4.8 = 77, Average sales = 31, B.O.M.= 77, X.5(1+(27k/31,166.67)) (Per. 1 and 8) = 77, X.5(1+.86) = 72,708 2 and 11 = 71,458 3 = 63,958 4 = 81,458 5 = 90,208 6 = 88,958 7 and 12 = 73,958 9 = 86, = 87,708 Month Forecast Sales 1 $27, , , , , , , , , , , ,000

4 A buyer is going to market and needs to compute the open-to-buy. The relevant data are as follows: planned stock at the end of March, $319,999 (at retail prices); planned March sales, $149,999; current stock-on-hand (March 1), $274,000; merchandise on order for delivery, $17,000; planned reductions, $11,000. What is the buyers open-to-buy? EOM= 319,999 Planned Sales = 149,999 Pld Reductions = 11,000 Requirements = 480,998 BOM = 274,000 Planned purch.= 206,998 On Order = 17,000300,000 OTB = 189,998-93,000

5 If a vendor ships you $1,000 worth of merchandise on April 27 with terms of 3/20, net 30 EOM, how much should you pay the vendor on June 8? If after the 25 th, is considered part of the next month so counting begins the end of May. 3% discount if pay before June 20. Total due on June 30 June 8 th would pay 1000-(1000*.03) or = 970

6 A retailer purchases goods that have a list price of $7,500. The manufacturer allows a trade discount of and a cash discount of 2/10, net 30. If the retailer takes both discounts, how much is paid to the vendor? 7500 –(.4*7500) = 7500 – 3000 = 4500 (25 and 10 go to others between the retailer and manufacturer) (.02 * 4500) = 4500 – 90 = (0.2*7500) = 4500 – 150 = 4350


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