To determine the days of product inventory on hand, use the formula: Days of Inventory=Average InventoryDaily UsageDays of Inventory=Daily UsageAverage Inventory
Given:
Average quantity on hand = 10 units
Annual sales = 60 units
Selling days in a year = 360 days
First, calculate the daily usage: Daily Usage=60 units360 days=0.1667 units/dayDaily Usage=360 days60 units=0.1667 units/day
Then, calculate the days of inventory: Days of Inventory=10 units0.1667 units/day≈60 daysDays of Inventory=0.1667 units/day10 units≈60 days
However, considering production days (261 days) is not relevant as the selling days (360 days) have already been used in the calculation.
Hence, the correct days of inventory based on daily usage calculation is approximately 60 days. To be more precise, using the given options: Days of Inventory=10 units(60 units/360 days)=60 daysDays of Inventory=(60 units/360 days)10 units=60 days
References:
Vollmann, T.E., Berry, W.L., Whybark, D.C., & Jacobs, F.R. (2005). Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill.
Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.
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