Podcast
Questions and Answers
How many units does the manufacturing company sell per year?
How many units does the manufacturing company sell per year?
- 40,000 units
- 50,000 units
- 20,000 units
- 30,000 units (correct)
What is the flow time for the company's inventory in months?
What is the flow time for the company's inventory in months?
- 4 months
- 8 months (correct)
- 6 months
- 10 months
What is the inventory turnover rate of the manufacturing company?
What is the inventory turnover rate of the manufacturing company?
- 2.0 turns per year
- 1.0 turns per year
- 1.5 turns per year (correct)
- 2.5 turns per year
What would be the absolute inventory cost for a product that costs $1,000?
What would be the absolute inventory cost for a product that costs $1,000?
How many guests can be seated at Penne Pesto during its operating hours?
How many guests can be seated at Penne Pesto during its operating hours?
What is the average time a guest spends in the restaurant, including waiting and dining?
What is the average time a guest spends in the restaurant, including waiting and dining?
How long does it take for the restaurant to clean a table after a guest leaves?
How long does it take for the restaurant to clean a table after a guest leaves?
What happens if there is no available seat at Penne Pesto?
What happens if there is no available seat at Penne Pesto?
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Study Notes
Inventory Turnover Calculation
- A medical device manufacturing company generated $60,000,000 in sales, with $20,000,000 worth of inventory at year-end.
- Each unit in inventory costs $1,000 and sells for $2,000.
- The company's inventory turnover rate is 1.5 turns per year, calculated by dividing the cost of goods sold (COGS) by the average inventory value.
- The company's inventory cost is 16.66% per year, calculated by dividing the annual cost of inventory by the inventory turnover rate.
- The per-unit inventory cost for a $1,000 product is $166.66.
Penne Pesto Restaurant Dynamics
- Penne Pesto is a San Francisco restaurant with 50 seats.
- The restaurant is always full during its four-hour evening service.
- Customers arrive spontaneously and have no reservation system.
- The average customer spends 50 minutes in the restaurant, broken down as follows:
- 5 minutes for seating and ordering.
- 10 minutes for food preparation.
- 30 minutes for dining.
- 5 minutes for check-out.
- It takes 10 minutes for the restaurant to clean and prepare a table for the next customer.
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