1. On the average, a company has a work-in-process lead time of 9 weeks and annual cost

of goods sold of $30 million. Assuming that the company works 48 weeks a year and 5

days a week:

a) What is the dollar value of the work-in-process?

b) If the work-in-process could be reduced to 6 weeks and the annual cost of carrying

inventory was 20% of the WIP inventory value, what would be the annual savings?

2. Amalgamated Fenderdenters sales are $12 million. The company spends $3.7 million

for purchase of direct materials and $3.4 million for direct labor; overhead is $3.5 million

and profit is $1.4 million. Direct labor and direct material vary directly with sales, but

overhead does not. The company wants to increase its profit by 50%.

a) By how much should the firm increase annual sales?

b) By how much should the firm decrease material costs?

c) By how much should the firm decrease labor cost?

3. Based on the 2021 annual report of Amazon.com:

a) What is the inventory turns ratio? In your calculation, make sure you use the

average inventory, and state your answer with two decimal places.

b) Based on the average inventory in part a, how many days of supply does that

represent?

c) If the cost of carrying inventory is 20% of the average inventory, what is the annual