Apparel Retailing:-
A large catalog retailer of fashion apparel reported $ 1 00,000,000 in revenues over the last year. On average, over the same year, the company had $5,000,000 worth of inventory in their warehouses. Assume that units in inventory are valued based on cost of goods sold (COGS) and that the retailer has a 1 00 percent markup on all products.
a. How many times each year does the retailer tum its inventory? The company uses a 40 percent per year cost of inventory. That is, for the hypothetical case that one item of $100 COGS would sit exactly one year in inventory, the company charges itself a $40 inventory cost.
b. What is the inventory cost for a $30 (COGS) item? You may assume that inventory turns are independent of the price.