Question

1. What is the BOM stock needed for the shoe department for April if sales are planned at $64,000 and the stock-to-sales ratio is 18.3?

2. What is the stock-to-sale ratio for the sleepwear department for May if sales are planned at $1,260,000 and the planned BOM May stock is $12,759,000?

3. The contemporary denim department has an average weekly sales figure of $49,200 and a planned turnover of 1.42 for the Fall season (six months). Calculate the amount of stock to be carried using the weeks of supply method.

Answer 1

What is the BOM stock needed for the shoe department for April if sales are planned at $64,000 and the stock-to-sales ratio is 18.3?

BOM is calculated by multiplying planned sales and stock to sales ratio.

BOM= Planned sales * stock to sales ratio

Planned sales= $64000

Stock to sales ratio= 18.3

BOM = $ 64,000*18.3= $1171200

Therefore BOM is $1171200

What is the stock-to-sale ratio for the sleepwear department for May if sales are planned at $1,260,000 and the planned BOM May stock is $12,759,000?

Stock to sale ratio is calculated by dividing BOM stock and planned sales.

Stock to sale ratio= BOM stock/ Planned sales

BOM stock= $12,759,000

Planned sales= 1,260,000

Stock to sale ratio= 12,759,000/ 1,260,000

= 10.12

Therefore stock to sale ratio is 10.12

The contemporary denim department has an average weekly sales figure of $49,200 and a planned turnover of 1.42 for the fall season (six months). Calculate the amount of stock to be carried using the weeks of supply method.

Minimum inventory to be maintained= number of weeks/ planned turnover.

Number of weeks here is 26 (on an average there are 26 weeks in six months)

Planned turnover= 1.42

Minimum inventory= 26/1.42= 18.30

Inventory = cost of goods sold/ inventory turnover

= 49200/ 1.42= $34647

Inventory on hand= 34647 * 18.30= 634040