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Chapter 3: Q16OQ (page 419)

The McDonald鈥檚 fast-food restaurant on campus sells an average of 4,000 quarter-pound hamburgers each week. Hamburger patties are resupplied twice a week, and on average the store has 350 pounds of hamburger in stock. Assume that the hamburger patties cost $1.00 a pound. What is the inventory turnover for the hamburger patties? On average, how many days of supply are on hand?

Short Answer

Expert verified

Inventory turnover for the hamburger patties will be 2.85, and the average day of supply will be 2.8 days.

Step by step solution

01

Step-by-Step SolutionStep 1: Inventory turnover

Inventory turnoveris the rate of the sale, use, or replacement of the inventory or stocks. In simple terms, the number of times the inventory is sold is referred to as inventory turnover.

02

Calculate the inventory turnover

Cost of goods sold = $1000 i.e. 4,000quarter pound burgers per $1 per pound

Average aggregate inventory value = $350

Inventory turnover = Costofgoodssoldaverageaggregaeinventoryvalue

Put the respected values in the given formula,

Inventory turnover = $1000350

= 2.85

03

Calculate the average day of supply

Weeks of supply = AverageaggregateinventoryvalueCostofgoodssold脳52weeks

Days of supply = AverageaggregateinventoryturnoverCostofgoodssold脳7

Days of supply = 3501000脳7

= 2.45

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