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The U.S. Airfilter company has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters

The U.S. Airfilter company has hired you as a supply chain consultant. The company makes air filters for residential heating and air-conditioning systems. These filters are made in a single plant located in Louisville, Kentucky, in the United States. They are distributed to retailers through wholesale centers in 100 locations in the United States, Canada, and Europe. You have collected the following data relating to the value of inventory in the U.S. Airfilter supply chain:

QUARTER 1 (JANUARY THROUGH MARCH) QUARTER 2 (APRIL THROUGH JUNE) QUARTER 3 (JULY THROUGH SEPTEMBER) QUARTER 4 (OCTOBER THROUGH DECEMBER)
All amounts in millions of U.S. dollars
Sales (total quarter):
United states 356 532 552 436
Canada 130 127 116 151
Europe 42 34 49 24
Cost of goods sold (total quarter) 338 445 465 398
Raw materials at the Louisville plant (end-of-quarter) 93 49 79 89
Work-in-process and finished goods at the Louisville plant (end-of-quarter) 194 175 127 176
Distribution center inventory (end-of-quarter):
United states 38 46 30 40
Canada 14 20 21 19
Europe 6 7 11 6

a. What is the average inventory turnover for the firm? (Round your answer to 3 decimal places.)

b. If you were given the assignment to increase inventory turnover, what would you focus on?

  • Increase the amount of inventory or increase sales or both
  • Reduce the amount of inventory or reduce sales or both
  • Reduce the amount of inventory or increase sales or both

c. The company reported that it used $500M worth of raw material during the year. On average, how many weeks of supply of raw material are on hand at the factory? (Round your answer to 2 decimal places.)

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