TABLE 12.3 SAPPHIRE AEROSPACE INVENTORY ITEMS Category Part Number Average Inventory Units Value per Unit Raw materials RM-1 20,000 $1 RM-2 5,000 5 RM-3 3,000 6 RM-4 1,000 8 Work-in-process WIP-1 6,000 10 WIP-2 8,000 12 Finished goods FG-1 1,000 65 FG-2 500 88

TABLE 12.3 SAPPHIRE AEROSPACE INVENTORY ITEMS Category Part Number Average Inventory Units Value per Unit Raw materials RM-1 20,000 $1 RM-2 5,000 5 RM-3 3,000 6 RM-4 1,000 8 Work-in-process WIP-1 6,000 10 WIP-2 8,000 12 Finished goods FG-1 1,000 65 FG-2 500 88

Contemporary Marketing

18th Edition

ISBN:9780357033777

Author:Louis E. Boone, David L. Kurtz

Publisher:Louis E. Boone, David L. Kurtz

Chapter15: Distribution Channels And Supply Chain Management

Section15.4: Components Of The Supply Chain

Problem 1LO

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Concept explainers

Aggregate Planning Strategies

On the basis of the demand forecast, an organization can complete its business plans. When the business plans are complete, an organization can work backward from the completed total sales to the raw materials needed. Thus, annual and quarterly plans are divided into labor, raw material, working capital, and other demands for a medium-term period (6 months to 18 months). This process of evaluating moderate production requirements is known as aggregate planning.

Question

Sapphire 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-process
items, 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?

TABLE 12.3 SAPPHIRE AEROSPACE INVENTORY ITEMS
Category
Part Number Average Inventory Units Value per Unit
Raw materials
RM-1
20,000
$1
RM-2
5,000
5
RM-3
3,000
6
RM-4
1,000
8
Work-in-process
WIP-1
6,000
10
WIP-2
8,000
12
Finished goods
FG-1
1,000
65
FG-2
500
88

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