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
As discussing the scope of accounting you should have observed here the accounting involves a sequence of activities connected with each other, starting along with the collecting,

Management: Organizations may not or may exist for the sole reason of profit. Though, information requires of the managers of both types of organizations are approximately the sam

Exercise 5-2 - Harwick company. 1) On April 5, purchased merchandise from Botham Company for $23,000, terms 2/10, net/30, FOB shipping point. 2)On April 6, paid freight costs of $

Q. What is Date column in journal? The first column on every journal page is for the date. Intended for the first journal entry on a page this column contains the year and mont


my unadjusted balance is not the same under credits and debits? And I can''t figure what went wrong.

Spin off is making new company by selling or distributing the shares of existing company

.1  INTRODUCTION The world keeps developing new ways and technologies to help do things and achieve a timeline shorter compared to the way it previously used to be done. New techn

J Green''s financial position at 1 May 2008 was as follows bank 2,910 cash 160 equipment 5,900 premises 25,000 creditors R smith 890 t thomas 610 debtors j car

hello, i am in Malaysia and try to reconcile a bank statement in USD. I am confuse on which currency should i follow to enter the bank transactions. If follow in USD, i could not