A company’s cash-to-cash cycle time is 36 days. How many weeks of inventory are on hand if the average collection time from customers is 60 days, and the company pays its vendors in 45 days?

The cash-to-cash cycle time is calculated using the formula: Cash-to-Cash Cycle = Days of Inventory on Hand (DIO) + Days Sales Outstanding (DSO) - Days Payables Outstanding (DPO). Using the provided data: 36 days = DIO + 60 days - 45 days. Simplifying the equation gives 36 = DIO + 15. Solving for DIO yields 21 days. To convert the days of inventory on hand to weeks, divide by 7 (21 days / 7 days per week), which equals 3 weeks.

A. Two weeks would mean 14 days of inventory, which results in an incorrect cash-to-cash cycle time of 29 days (14 + 60 - 45).
C. Four weeks would mean 28 days of inventory, which results in an incorrect cash-to-cash cycle time of 43 days (28 + 60 - 45).
D. Five weeks would mean 35 days of inventory, which results in an incorrect cash-to-cash cycle time of 50 days (35 + 60 - 45).

1. APICS Dictionary, 16th edition. Definition of "cash-to-cash cycle time." (Provides the standard formula and definitions for its components).

2. Farris, P. W., Bendle, N. T., Pfeifer, P. E., & Reibstein, D. J. (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Pearson Education. (Chapter on financial metrics, detailing the calculation and importance of the cash conversion cycle).

3. MIT OpenCourseWare. (2004). 15.762, Supply Chain Planning, Fall 2004. Lecture Notes, "Supply Chain Performance Measures." (Course materials often cover the cash-to-cash cycle as a key performance indicator for supply chain financial health).