Explain inventory turnover, Operation Management

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Baker Mfg. inc. wish to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory. 1. Based on the data tables below, calculate for both Arrow Distributing and Baker MFG: a. Inventory as a % of total assets. b. Inventory turnover c. Weeks of supply of inventory 2. How does Baker's performance compare to the industry leaders? 3. Is Arrow's supply chain performance, as measured by these inventory metrics, better off than that of Baker? 4. Calculate the ROA for both Arrow and Baker. What conclusions would you draw about the overall operation of these two firms based on the ROA comparison? Arrow Distribution Baker Mfg. Sales=Net Revenue $16,500 $27,500 Cost of sales $13500 $21,500 Inventory $1,000 $1250 Total Assets $8,600 $16,600 Net Income $ 400 $600


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