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\{Current Date\} Subject: Nike 2019 vs. 2020 Days on Hand Inventory Analysis From: Alexis Hirt Introduction: Nike is a retailer with annual Cost of goods sold of dollars and dollars respectively. The current inventory position of Nike is dollars and dollars respectively. Nike carries 25\% Carrying Cost. Results: Days in Inventory = Inventory / Daily COGS. \{Detail your calculations in the table above and verbiage below\} Nike calculations: 2019 Days of inventory = Inventory / Daily COGS = 2020 Days of inventory = Inventory / Daily COGS = Analysis: The results are close enough to be believable. It is interesting that the inventory tumover number favor 2019, yet the key stats and ratios generally favor 2020. I assume that the variations are due to slight differences in the nature of time. Even though Nike has a different business model in terms of variety and price point. Improvement opportunity: \{In this section, provide your analysis concerning the cost impact of Nike's inventory growth. You can analyze the cost impact by determining how much additional inventory holding cost Nike incurred due to the increased inventory carried in 2020. You are studying the implications if Nike could achieve the same Days in Inventory in 2020 as in 2019 (the same cost of sales, but reduced inventory to support the sales). Assume a 25\% carrying cost. How could cash flow be impacted? Perform the calculations below and provide your assessment? To evaluate the improvement opportunity, you must calculate the following: New Inventory Level = 2019 Days in Inventory X 2020 daily COGS Reduction in inventory =2020 Inventory New Inventory Level calculated above Annual savings = Inventory reduction calculated above x carrying cost rate (assuming a 25% carrying cost)

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