Question

Suppose a local hardware store turns over its inventory of power pools 6.0 times per year If the hardware store has an average inventory of 120 power tools, what is its average daily sales rate for power tools?

Answer 1

Answer: 2 power tools

Explanation:

Given the variables, Little's formula can be used to solve this.

Inventory turnover = Annual Sales / Average inventory

First find annual sales;

6 = Annual sales / 120

Annual sales = 6 * 120

Annual sales = 720 power tools.

Average daily sales assuming 360 days;

= 720/360

= 2 power tools