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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
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