inventory cost

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The following table shows financial data (year 2006) for Dirt Cheap Wholesale and Kwiki-Mart, two US retailers.
Dirt Cheap Wholesale Kwiki-Mart Stores
Inventories ($m)
Sales (net $m)
COGS ($m) 4754
59217
52762 40894
397206
326606
Assume that both companies have an average annual holding cost rate of 20% (i.e. it costs both retailers $2 to hold an item that they procured for $10 for one entire year).
(a) How many days, on average, does a product stay in Dirt Cheap’s inventory before it is sold? Assume that stores operate 365 days a year.
(b) How much lower (expressed in $’s) is, on average, the inventory cost for Dirt Cheap compared to Kwiki-Mart of a house hold cleaner valued at $5 COGS? Assume that the unit cost of the house hold cleaner is the same for both companies and that the price and the inventory turns of an item are independent.

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