The 2002 General Mills annual report disclosed the following information:
\section*{Part A.}
\section*{TO OUR SHAREHOLDERS:}
For General Mills, fiscal 2002 was a year of significant change. On Oct. 31, 2001, we completed our long-anticipated acquisition of Pillsbury. Overnight our annualized revenues nearly doubled, our workforce more than doubled, and our portfolio of leading brands expanded to include the Pillsbury Doughboy, Progresso, Totino's, Green Giant, Old El Paso, and more. Over the next seven months, we rapidly integrated work teams and activities. By year-end, much of the hard work to create one sales force, one supply chain organization and one unified marketing plan for our businesses was completed. As a result, we entered 2003 more confident than ever that the combination of General Mills and Pillsbury creates a powerful consumer foods company with excellent prospects for delivering superior long-term growth and returns.
The strategies that will drive our growth in 2003-and beyond-are the same ones that have guided General Mills in the past:
\section*{The first key is product innovation...}
Our second growth strategy is channel expansion. Today's consumers are picking up groceries in lots of new places, from general merchandise chains to convenience stores. In addition, sales for food eaten away from home are expected to grow faster than at-home food sales over the long term. Our Bakeries and Foodservice business is focused on expanding sales of our products with foodservice distributors and operators, bakeries, convenience stores and vending companies. Adding Pillsbury quadrupled the size of this business for General Mills, and we are already generating new volume by selling General Mills product lines to established Pillsbury customers and vice versa.
Our final key strategy is margin expansion... And beyond (efficiencies resulting by combining Pillsbury and General Mills) we expect our larger supply chain to create oppor-
tunities for ongoing productivity savings as we (realize cost savings resulting from our larger size after the acquisition).
\section*{Part B.}
The following information appears in the notes to consolidated financial statements.
\section*{6. INVENTORIES}
The components of inventories are as follows:

\section*{Required}
A. In general, describe General Mills' supply chain.
B. Discuss how the acquisition of Pillsbury radically altered General Mills' supply chain.
C. Evaluate the various types of inventory reported at May 26, 2002, and May 27, 2001. What kinds of products are included in the first three categories shown in note 6 ?

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In Millions May 26, 2002 May 27, 2001 Raw materials, work in process and supplies $ 234 $129 Finished goods 753 326 Grain 99 94 Other (31) (30) Total inventories $1,055 $519