The Operating Cycle Two Wheeler Cycle Shop buys all of its bikes from one manufacturer, Baxter Bikes. On average, bikes are on hand for 45 days before Two Wheeler sells them. The company sells some bikes for cash but also extends credit to its customers for 30 days.

Required 1. On average, what is the minimum length of Two Wheeler’s operating cycle? the maximum length?

2. Explain why the operating cycle for Baxter, the manufacturer of the bikes, would normally be longer than that of Two Wheeler, the retailer.

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