Days of supply calculation , Accounting Basics

Assignment Help:

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. 


Related Discussions:- Days of supply calculation

How is a journal entry recorded?, Journal Entries are recorded on a double ...

Journal Entries are recorded on a double entry system like debit and credit concept. In order to record a journal entry the following steps require to be followed. ? Enter the J

Determine the income statement columns of worksheet, Determine the Income S...

Determine the Income Statement columns of Worksheet Income Statement columns of the worksheet would comprise the amounts from Adjusted Trial Balance columns which are expenses

safety stock is appropriate, Given this information: Lead-time demand =...

Given this information: Lead-time demand = 600 pounds Standard deviation of lead-time demand = 52 pounds (Assume normality.) Acceptable stockout risk during lead time = 4

Management, briefly explain management process

briefly explain management process

Word problem, a 50 petty cash fund has cash of 20 and valid receipts for 40...

a 50 petty cash fund has cash of 20 and valid receipts for 40. The entry to replenish the fund would include a

JOURNALS., CALCULATIONS VARIOUS QUESTIONS

CALCULATIONS VARIOUS QUESTIONS

Common rule of thumb in business, 80 - 20 rule - A common rule of thumb in ...

80 - 20 rule - A common rule of thumb in business which says that 20% of the items produce80% of the action -- 20% of product line produces 80% of the sales, 20 percent of thecusto

Role of government in a mixed economy, Government: In a mixed economy this...

Government: In a mixed economy this is seems to be the duty of the Government to direct the operation of the economic system in that a way which it subseries the general good. Con

Accounting concepts, In earlier section, we had illustrated accounting as t...

In earlier section, we had illustrated accounting as the language of business. Along with language, accounting has several dialects. There are dissimilarities in terminology. In de

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd