Having sufficient product for customers to choose from is essential in meeting sales goals. Once

you have forecast unit sales, you can estimate the amount you have to purchase to meet that

goal. It is important to provide customers with enough of a selection so that no sales are lost,

while keeping inventory as low as possible. In Entrepreneur, a good inventory/sales ratio is about

0.5. In this assignment, you will calculate inventory/sales ratios, and calculate purchase amounts

to meet a target ratio.

1. A firm sold 2000 tops and 1800 pants last quarter, and currently has inventory of 600 tops

and 1100 pants. What is the inventory/sales ratio for each? What would be the ideal amount

of inventory for each if the target ratio is 0.5?

2. Calculate the target inventory and purchase amount in the table below using a target

inventory/sales ratio of 0.5:

Tops Pants

Current Inventory 600 1000

Projected Sales 1900 1800

Target Inventory

Purchase Amount

3. Complete the following table based on your store's current inventory and projected sales

for the next quarter. Use a target inventory/sales ratio of 0.5.

Tops Pants

Current Inventory

Projected Sales

Target Inventory

Purchase Amount

4. If the inventory/sales ratio for the quarter is 0.3, how many days inventory does the store

have?