U.S. Airfilter has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters are made in a single plant located in Louisville, Kentucky, in the United States. They are distributed to retail- ers through wholesale centers in 100 locations in the United States, Canada, and Europe. You have collected the following data relating to the value of inventory in the U.S. Airfil- ter supply chain: Sales (total quarter): United States Canada Europe Cost of goods sold (total quarter) Raw materials at the Louisville plant (end-of-quarter) Work-in-process and finished goods at the Louisville plant (end-of-quarter) Distribution center inventory (end-of-quarter): United States Canada Europe QUARTER I (JANUARY THROUGH MARCH) 300 75 30 280 50 100 25 10 5 QUARTER 2 (APRIL THROUGH JUNE) 360 60 33 295 40 105 27 11 4 QUARTER 3 (JULY THROUGH SEPTEMBER) 405 75 20 340 55 120 23 15 5 QUARTER 4 (OCTOBER THROUGH DECEMBER) 375 70 15 350 60 150 30 16 5 All amounts in millions of U.S. dollars. a. What is the average inventory turnover for the firm? b. If you were given the assignment to increase inventory turnover, what would you. focus on? Why? c. The company reported that it used $500M worth of raw material during the year. On average, how many weeks of supply of raw material are on hand at the factory?
U.S. Airfilter has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters are made in a single plant located in Louisville, Kentucky, in the United States. They are distributed to retail- ers through wholesale centers in 100 locations in the United States, Canada, and Europe. You have collected the following data relating to the value of inventory in the U.S. Airfil- ter supply chain: Sales (total quarter): United States Canada Europe Cost of goods sold (total quarter) Raw materials at the Louisville plant (end-of-quarter) Work-in-process and finished goods at the Louisville plant (end-of-quarter) Distribution center inventory (end-of-quarter): United States Canada Europe QUARTER I (JANUARY THROUGH MARCH) 300 75 30 280 50 100 25 10 5 QUARTER 2 (APRIL THROUGH JUNE) 360 60 33 295 40 105 27 11 4 QUARTER 3 (JULY THROUGH SEPTEMBER) 405 75 20 340 55 120 23 15 5 QUARTER 4 (OCTOBER THROUGH DECEMBER) 375 70 15 350 60 150 30 16 5 All amounts in millions of U.S. dollars. a. What is the average inventory turnover for the firm? b. If you were given the assignment to increase inventory turnover, what would you. focus on? Why? c. The company reported that it used $500M worth of raw material during the year. On average, how many weeks of supply of raw material are on hand at the factory?
Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
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Transcribed Image Text:U.S. Airfilter has hired you as a supply chain consultant. The company makes air filters
for residential heating and air-conditioning systems. These filters are made in a single
plant located in Louisville, Kentucky, in the United States. They are distributed to retail-
ers through wholesale centers in 100 locations in the United States, Canada, and Europe.
You have collected the following data relating to the value of inventory in the U.S. Airfil-
ter supply chain:
Sales (total quarter):
United States
Canada
Europe
Cost of goods
sold (total quarter)
Raw materials at
the Louisville
plant (end-of-quarter)
Work-in-process
and finished
goods at the
Louisville plant
(end-of-quarter)
Distribution center
inventory (end-of-quarter):
United States
Canada
Europe
QUARTER 1
QUARTER 3
(JULY THROUGH
THROUGH MARCH) THROUGH JUNE) SEPTEMBER)
QUARTER 2
(APRIL
(JANUARY
300
75
30
280
50
100
25
10
5
350
60
33
295
40
105
27
11
4
405
75
20
340
55
120
23
15
5
QUARTER 4
(OCTOBER THROUGH
DECEMBER)
375
70
15
350
60
150
30
16
5
All amounts in millions of U.S. dollars.
a. What is the average inventory turnover for the firm?
b. If you were given the assignment to increase inventory turnover, what would you
focus on? Why?
c. The company reported that it used $500M worth of raw material during the year. On
average, how many weeks of supply of raw material are on hand at the factory?
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