Days of supply calculation , Accounting Basics

Using the data from the Dell Computer annual report 

determine  how  Dell  calculated  the  four  days'  supply  of  raw  materials.  Do   you think four days'supply is a valid representation of the amount of raw material Dell has on hand at the end of the year? Why or why not?       

Net revenue (fiscal year 2005)                                                                    $49,205

Cost of revenue (fiscal year 2005)                                                              $40,190

Production materials on hand (28 January 2005)                                     $228

Work-in-process and finished goods on hand (28 January 2005)         $231

Days of supply in inventory                                                    4day

 

Solution

Days of supply calculation = ($228+$231/$40190)*365days  = 4.17 days 

Dell effectively utilizes just in time. They have revolutionized the selling of personal computers using a direct-business model whose fundamental tenets include taking orders directly from customers, thereby reducing inventory and streamlining distribution .After Dell has received a customer order, they then begin production of the product that the customer desires. A pull system is reactive whereby production is executed in response to a customer order. Customer receives the order in maximum 4 days and at a competitive price by following the supply chain operations. It is a powerful approach to production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. 

Posted Date: 8/9/2012 6:23:29 AM | Location : United States







Related Discussions:- Days of supply calculation , Assignment Help, Ask Question on Days of supply calculation , Get Answer, Expert's Help, Days of supply calculation Discussions

Write discussion on Days of supply calculation
Your posts are moderated
Related Questions

Billable expenses are those expenses incurred by you on behalf of your client in performing duties / supply and service. These expenses are recoverable from your customer by way of

A client comes to you for investment advice on his $500,000 winnings from the lottery. He has been offered the following options by three different financial institutions and reque

Just i need a news about public interest theory which is after 1 Mar 2013 for my assignment.

Given a net income of $90,000, what is the return on investment for 2000? A. 7.9% B. 22.22% C. 22.78% D. 24.8%

1. Carmen Santiago works for a number of businesses as a "consultant." She has helped design accounting systems, provided accounting services, and analyzed the financial stre

Q. Illustrate Exchange-price concept? Exchange-price (or cost) concept (principle). The majority of the amounts in an accounting system are the objective money prices determine

Q. What is Accounts receivable? Accounts receivable as well called trade accounts receivable are amounts owed to a business by customers. An account receivable occurs when a co

A user buys a new transponder for $20. What debit and credit entries would need to be made?

Enumerate the fundamentals of financial accounting information Frame works and principles which have been developed try to address fundamental questions like: ?Who are user