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InventoryWritingAssignmentExample-2023.docx

****************************** TEMPLATE INSTRUCTIONS **********************************

Date: {Put Current Date Here}

Subject: Walmart 2022 vs. Target 2022 Days on Hand Inventory Analysis

From: {Put Your Name Here}

Company Summaries: {Summarize Walmart and Target, including their business, annual sales, number of stores, distribution centers, etc. Include any company strategy information such as target markets, price points, etc.}

Results:

Company

Cost of Sales

($ Millions)

Inventory

($ Millions)

Daily COGS $ ($ millions)

(2 decimal point accuracy)

Days of Inventory

($ millions)

(2 decimal point accuracy)

Walmart 2022

Target 2022

Provide details of your Calculations in the table below (follow the example):

· Substitute Company Name #1 with your first company name

· Substitute all of the 9s with actual data values

· Substitute Company Name #2 with your first company name

· Substitute all of the 9s with actual data values

Results Calculations:

Company Name #1

Daily COGS $ = 99999 / 999 = 9999

Days of Inventory = 99999 / 9999.99 = 99.99

Company Name #2

Daily COGS $ = 99999 / 999 = 9999

Days of Inventory = 99999 / 9999.99 = 99.99

Analysis: {In this section, provide your analysis of the results. Discuss the changes in the values within the table above and provide some potential reasons for performance differences. In other words, research and discuss logical causes for the difference in inventory between the two companies}

Improvement opportunity: {In this section, provide your analysis concerning the cost impact of improving inventory management. First, determine which company performs inventory management better and discuss your findings supporting your answer with evidence from your calculations above. You can analyze the cost impact by deciding how much additional inventory holding a company incurs due to the different inventory carried. You are studying the implications if the company performing poorer in inventory management could achieve the same Days in Inventory as the company performing better (the same cost of sales but reduced inventory to support the sales). Assume a 25% carrying cost. In this section, discuss how cash flow can be impacted and assess the improvement opportunity. Perform the calculations below and provide your assessment}

To evaluate the improvement opportunity, you must calculate the following:

New Inventory Level = 2022 Days in Inventory X 2022 daily COGS

Reduction in inventory = 2022 Inventory – New Inventory Level calculated above

Annual savings = Inventory reduction calculated above x carrying cost rate (assuming a 25% carrying cost). Express the annual savings in terms of trillions. SHOW ALL CALCULATIONS IN THE TABLE BELOW}

Performance Savings Analysis

New Inventory Level

99.99 X 9999.99 = 99999.99

Reduction in Inventory

99999 – 99999.99 = 99999.99

Annual Savings

99999,99 X carrying cost = $999999.99

**************************************** TEMPLATE ********************************************

USE THIS FORMAT, BUT DO NOT INCLUDE ITEMS IN RED FONT

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Date: Current Date

Subject: Walmart 2022 vs. Target 2022 Days on Hand Inventory Analysis

From: Your Name

Company Summaries: Insert company summary information narrative here

Results:

Company

Cost of Sales

($ Millions)

Inventory

($ Millions)

Daily COGS $ (2 decimal point accuracy)

Days of Inventory (2 decimal point accuracy)

Walmart 2022

Target 2022

Results Calculations:

Company Name #1

Daily COGS $ = 99999 / 999 = 9999

Days of Inventory = 99999 / 9999.99 = 99.99

Company Name #2

Daily COGS $ = 99999 / 999 = 9999

Days of Inventory = 99999 / 9999.99 = 99.99

Analysis: Insert analysis narrative here

Improvement opportunity: Insert your improvement opportunity analysis and conclusions here.

Performance Savings Analysis:

New Inventory Level

99.99 X 9999.99 = 99999.99

Reduction in Inventory

99999 – 99999.99 = 99999.99

Annual Savings

99999,99 X carrying cost = $999999.99

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