Name: Muhammad Yasir

Registration number: 1711130

Assignment:# 8

Class: BBA-6

Course: Operations Management

Submission on: June 08, 2020

Submitted to: Dr. Muhammad Shafiq

Inventory Turnover

It gives the ratio which tells us how fast a company sells its inventory. It depends on sales and
inventory stock. Higher sales will give higher Turnover whereas more stock will lead to lesser
turnover. The aim of any company should be to increase inventory by raising their sales.

Inventory turnover= CGS/Average Inventory

Where,

CGS = Cost of goods sold

Average inventory= Arithmetical mean between beginning and ending inventory.

Bullwhip Effect

The information regarding consumer demand is not always accurate and can be subject to
variation. This in-turn requires companies to order more goods. The phenomenon is called The
Bullwhip effect.

It can be calculated using the formula:

Bullwhip Effect= Variance of orders/Variance of Demand