Chapter 1.4, Problem 14E

Continued This is a continuation of Exercise 13. As we saw earlier, the stock turnover rate of an item is the number of times that the average inventory of the item needs to be replaced as a result of sales in a given time period. Suppose that a hardware store sells 80 shovels each year.

a. Suppose that the hardware store maintains an average inventory of 5 shovels. What is the annual stock turnover rate for the shovels? How is this related to the yearly number of orders to the wholesaler needed to restock inventory?

b. What would he the annual stock turnover rate if the store maintained an average inventory of 20 shovels?

c. Write a formula expressing the annual stock turnover rate as a function of the average inventory of shovels, identify the function and the variable, and state the units.