The following table shows financial data (year 2004) for Costco Wholesale and Wal-Mart, two major U.S. retailers. costco ($m) walmart ($m) inventory 3,643.00 29,447.00 sales(net) 48,106.00 286,103.00 COGS 41,651.00 215,493.00 Assume that both companies have an average annual holding cost rate of 30 percent (i.e., it costs both retailers $3 to hold an item that they procured for $10 for one entire year). a. How many days, on average, does a product stay in Costco's inventory before it is sold? Assume that stores are operated 365 days a year. b. How much lower is, on average, the inventory cost for Costco compared to Wal-Mart of a household cleaner valued at $5 COGS? Assume that the unit cost of the household cleaner is the same for both companies and that the price and the inventory turns of an item are independent
The following table shows financial data (year 2004) for Costco Wholesale and Wal-Mart, two major U.S. retailers.
|
|
costco ($m) |
walmart ($m) |
|
inventory |
3,643.00 |
29,447.00 |
|
sales(net) |
48,106.00 |
286,103.00 |
|
COGS |
41,651.00 |
215,493.00 |
Assume that both companies have an average annual holding cost rate of 30 percent (i.e., it costs both retailers $3 to hold an item that they procured for $10 for one entire year). a. How many days, on average, does a product stay in Costco's inventory before it is sold? Assume that stores are operated 365 days a year. b. How much lower is, on average, the inventory cost for Costco compared to Wal-Mart of a household cleaner valued at $5 COGS? Assume that the unit cost of the household cleaner is the same for both companies and that the price and the inventory turns of an item are independent.
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