Buzzrite, a retailer of casual clothes, ended the current year with annual sales (at cost) of $48 million. During the year the inventory of apparel turned over six times. For the next year, Buzzrite plans to increase annual sales (at cost) by25 percent.
a. What is the increase in the average aggregate inventory value required if Buzzrite maintains the same inventory turnover during the next year?
b. What change in inventory turns must Buzzrite achieve if, through better supply chain management. It wants to support next year’s sales with no increase in the average aggregate inventory value?