A television manufacturer would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on average inventories from last year's financial statement:
Raw materials $1,500,000
Work-in-process $1,200,000
Finished goods $800,000
In addition, the cost of goods sold last year (50 weeks) was $20 million.
a. What is its total inventory (measured as weeks of supply)?
b. What is its inventory turnover?
c. Is the inventory turnover number good or bad? Why?