Question

From the following information, calculate Inventory Turnover Ratio and
Inventory Turnover Period :
Maximum Stock Level 1,500 Units
Minimum Stock Level 600 Units
Re-order quantity 750 Units
Issues 3,750 Units

Answer 1

Answer:

From the following information, calculate Inventory Turnover Ratio and

Inventory Turnover Period :

Maximum Stock Level 1,500 Units

Minimum Stock Level 600 Units

Re-order quantity 750 Units

Issues 3750

Answer 2

  We have to calculate the  inventory turnover ratio from the information given

• We are given the maximum stock level at $1500$ units
• We are given the maximum stock level at  $600$ units
• We are given the reorder level at  $600$ units
• We are given that the company has issued $3750$ units
• We need to calculate the inventory turnover ratio whose formula is $\frac{Cost of goods sold}{Average inventory}$
• in this sum, as the cost of goods sold is not given the issued quantity is taken
• Average inventory is the Minimum inventory $+ \frac{1}{2}$ Reorder quantity
• The average inventory is $975$ units
• The inventory turnover ratio is $\frac{3750}{975}$
• So, by calculating the above, we get the inventory turnover ratio as $3.85$ times