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Matching Supply with Demand 3rd Edition by Gerard Cachon,Christian Terwiesch
Edition 3ISBN: 978-0073525204Matching Supply with Demand 3rd Edition by Gerard Cachon,Christian Terwiesch
Edition 3ISBN: 978-0073525204 Exercise 1
(Dell) What percentage of cost of a Dell computer reflects inventory costs Assume Dell's yearly inventory cost is 40 percent to account for the cost of capital for financing the inventory, the warehouse space, and the cost of obsolescence. In other words, Dell incurs a cost of $40 for a $100 component that is in the company's inventory for one entire year. In 2001, Dell's 10-k reports showed that the company had $400 million in inventory and COGS of $26,442 million.
Explanation
Verified
Verified
Inventory Cost is the Cost associated with Ordering, Holding, Obsolescence Pilferage cost of the Inventory which is expressed as a percentage of the Inventory Valuation
Consider the following data given in the question:
Inventory in D's 10-k = $400
Cost of goods sold in D's 10-k = $26,442
Calculate the Inventory Turns for company D for the year 2001 by using the formula as follows:
Calculate the cost of inventory per unit from the formula as follows:
Therefore, the percentage of cost a D computer reflects inventory costs is
Consider the following data given in the question:
Inventory in D's 10-k = $400
Cost of goods sold in D's 10-k = $26,442
Calculate the Inventory Turns for company D for the year 2001 by using the formula as follows:
Calculate the cost of inventory per unit from the formula as follows: Therefore, the percentage of cost a D computer reflects inventory costs is 
Matching Supply with Demand 3rd Edition by Gerard Cachon,Christian Terwiesch
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