Management Assignment
Tifa99
InventoryWritingAssignmentExample-2022.docx{Current Date}
Subject: Nike 2019 vs. 2020 Days on Hand Inventory Analysis
From: {Your Name}
Introduction: {Provide a summary of Nike, including items such as what business they are in, annual sales, number of stores, number of distribution centers, etc. Include any company strategy information such as target markets, price points, etc.}
Results: Days in Inventory = Inventory / Daily COGS.
|
Company |
Cost of Revenue (Millions) |
Inventory (Millions) |
Daily COGS |
Days of Inventory |
|
Nike 2019 |
|
|
|
|
|
Nike 2020 |
|
|
|
|
{Detail your calculations in the table above and verbiage below}
2019 Days of inventory = Inventory / Daily COGS =
2020 Days of inventory = Inventory / Daily COGS =
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, what are some causes for the difference in inventory between 2019 and 2020?
Improvement opportunity: {In this section, provide your analysis concerning the cost impact of Nike’s inventory growth. You can analyze the cost impact by determining how much additional inventory holding cost Nike incurred due to the increased inventory carried in 2020. You are studying the implications if Nike could achieve the same Days in Inventory in 2020 as in 2019 (the same cost of sales, but reduced inventory to support the sales). Assume a 25% carrying cost. How could cash flow be impacted? Perform the calculations below and provide your assessment}
To evaluate the improvement opportunity, you must calculate the following:
New Inventory Level = 2019 Days in Inventory X 2020 daily COGS
Reduction in inventory = 2020 Inventory – New Inventory Level calculated above
Annual savings = Inventory reduction calculated above x carrying cost rate (assuming a 25% carrying cost)
