Lead time for computers is 5 days with daily demand of 25 and safety stock of 5 computers. If management wants to use 10 kanbans how many computers should each one hold?
The selection of levels of activity to depict a flexible budget 1) will be within the relevant range. 2) is largely a matter of expediency. 3) is governed by generally accepted accounting principles.
The inventory turnover and current ratio are related.The combination of a high current ratio and a low inventory turnover ratio,relative to industry norms,suggests that the firm has an above-average inventory level and/or that part of the inventory is obsolete or damaged.