EBK OM
6th Edition
ISBN: 9781305888210
Author: Collier
Publisher: YUZU
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Chapter 12, Problem 5PA
Summary Introduction
Interpretation: Cash to Cash conversion cycle needs to be calculated based on given information.
Concept Introduction: Cash to Cash conversion cycle is an important financial metric which is used to measure the cash flow cycles.
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- What is the relationship between inventory and the nine competitive priorities we discussed in Chapter 1, ”Using Operations to Create Value”? Suppose that two competing manufacturers, Company H and Company L, are similar except that Company H has much higher investments in raw materials, work-in-process, and finished goods inventory than Company L. In which of the nine competitive priorities will Company H have an advantage?arrow_forwardWill the supply chain world remain chaotic this year, asks Supply Chain Dive (Feb. 22, 2022)? What about shortages, scarce materials, and delivery expectations? How should companies approach their supply chain strategy in 2022? Here are 7 trends suggested in a new ebook: TREND #1: LABOR SHORTAGE CONTINUES The first prediction for 2022 is that the labor shortage in supply chains will continue well into 2022. There’s no area of labor left unturned – be it labor planning, employee retention, labor efficiencies, or robotics. Every strategy and profit impact option must be rescoped. TREND #2: NEED FOR REAL-TIME VISIBILITY Companies are now recognizing the importance of real-time visibility in their supply chain. Disruptions are rampant and costs are soaring. Teams need to be more proactive in the way they handle their processes, people, and products. TREND #3: RISING VENDOR EXPECTATIONS Companies are starting to demand more from their vendors in terms of functionality,…arrow_forwardWill the supply chain world remain chaotic this year, asks Supply Chain Dive (Feb. 22, 2022)? What about shortages, scarce materials, and delivery expectations? How should companies approach their supply chain strategy in 2022? Here are 7 trends suggested in a new ebook: TREND #1: LABOR SHORTAGE CONTINUES The first prediction for 2022 is that the labor shortage in supply chains will continue well into 2022. There’s no area of labor left unturned – be it labor planning, employee retention, labor efficiencies, or robotics. Every strategy and profit impact option must be rescoped. TREND #2: NEED FOR REAL-TIME VISIBILITY Companies are now recognizing the importance of real-time visibility in their supply chain. Disruptions are rampant and costs are soaring. Teams need to be more proactive in the way they handle their processes, people, and products. TREND #3: RISING VENDOR EXPECTATIONS Companies are starting to demand more from their vendors in terms of functionality,…arrow_forward
- Costco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…arrow_forwardCostco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…arrow_forwardCostco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…arrow_forward
- Costco also employs a just-in-time inventory management system, which includes sharing data directly with many of its largest suppliers. Companies like Kimberly-Clark calculate re-order points in real time and send new inventory, as needed, to replenish store shelves. Costco also works to redesign product packaging to squeeze more bulky goods onto trucks and shelves, reducing the number of orders Costco needs to place with suppliers.Occasionally, the company leverages its 75 million square feet of warehouse space to reduce purchasing costs. For example, when Procter & Gamble recently announced a 6% price increase for its paper goods, Costco bought 258 truckloads of paper towels at the old rate and stored them using available capacity in its distribution centers and warehouses.These inventory management techniques have allowed Costco to succeed in tough times while others have failed. Costco turns its inventory nearly 12 times a year, far more often than other retailers. With many…arrow_forwardA firm’s cost of goods sold last year was $3,410,000, and the firm operates 52 weeks per year. It carries seven items in inventory: three raw materials, two work-in-process items, and two finished goods. The following table contains last year’s average inventory level for each item, along with its value. a. What is the average aggregate inventory value? b. How many weeks of supply does the firm maintain? c. What was the inventory turnover last year?arrow_forwardAs a logistics specialist, you are responsible for meeting customer demand. One of your customers places orders for you to supply four products by the end of October. You have limited capacity for raw material and other facilities. You are required to satisfy customer demand by manufacturing the products and/or buying from a supplier. After consulting with the production department, you obtained the following information. Product A Product B Product C Product D Order quantity 2000 3500 1500 2500 Hours required on machine X per unit 2 4 5 3 Hours required on machine Y per unit 4 3 6 2 Raw material in kilos 5 1 4 6 Time needed for Packaging per unit 36 minutes 30 minutes 45 minutes 24 minutes Available monthly hours per month: 8,000 on machine X, 6000 on machine Y, and 3,000 hours for packaging. Purchased items from your supplier are already packaged. Available raw material per month: 5,000 kilos…arrow_forward
- As an operations management consultant, you have been asked to evaluate a furniture manufacturer’s cash-to-cash conversion cycle under the following assumptions: sales of $23.5 million, cost of goods sold of $20.8 million, 50 operating weeks a year, total average on-hand inventory of $2,150,000, accounts receivable equal to $2,455,000, and accounts payable of $3,695,000. What do you conclude? What would be the impact of reducing the accounts payable from $3,695,000to $2,000,000 and all other data remained the same?arrow_forwardSapphire Aerospace operates 52 weeks per year, and its cost of goods sold last year was $6,500,000. The firm carries eight items in inventory: four raw materials, two work-in-processitems, and two finished goods. Table 12.3 shows last year’s average inventory levels for these items, along with their unit values.a. What is the average aggregate inventory value?b. How many weeks of supply does the firm have?c. What was the inventory turnover last year?arrow_forwardConsider walmart is having a inventory management problem. What could be the root cause for this problem? Use the 5 M's (Manpower, Methods, Materials, Machines, Measurements) and describe how changes in these factor can fix the problem?arrow_forward
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Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY