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 cash-to-cash cycle time is the duration it takes for a company to convert its investments in

inventory into cash flows from sales. The formula to calculate the cash-to-cash cycle time is:

Cash-to-Cash Cycle Time=Inventory Days+Receivables Days−Payables DaysCash-to-

Cash Cycle Time=Inventory Days+Receivables Days−Payables Days

Given:

Cash-to-cash cycle time = 36 days

Receivables Days = 60 days

Payables Days = 45 days

Rearranging the formula to find the Inventory Days: Inventory Days=Cash-to-

Cash Cycle Time+Payables Days−Receivables DaysInventory Days=Cash-to-

Cash Cycle Time+Payables Days−Receivables Days

Inventory Days=36+45−60=21 daysInventory Days=36+45−60=21 days

To find the number of weeks of inventory on hand:

Weeks of Inventory=Inventory Days7=217=3 weeksWeeks of Inventory=7Inventory Days =721 =3 wee

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Reference:

APICS Dictionary

"Supply Chain Management: Strategy, Planning, and Operation" by Sunil Chopra and Peter Meindl