APICS Certified Supply Chain Professional (CSCP) — Question 4

A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:

Answer options

• A. $29,000,000.
• B. $15,750,000.
• C. $10,500,000.
• D. $ 5,250,000.

Correct answer: D

Explanation

The correct answer is D, which represents the cost savings achieved by increasing inventory turns. The other options are incorrect as they overestimate the savings based on the given cost of goods sold and carrying cost calculations.