By: SCM Academic Resources
Example: A company with $10M daily COGS increases inventory days by 30. This ties up an extra $300M in working capital ($10M × 30 days). supply chain management midterm exam questions
The old model is more resilient to a port closure because it holds months of inventory in warehouses. The new model’s low inventory and reliance on just-in-time air freight would fail immediately if air capacity is constrained. Question 12 (Essay – Strategy): Define the "Cash-to-Cash Cycle" and explain why it is a critical metric for supply chain health. Using a hypothetical example of a company that increases its inventory days from 30 to 60, calculate the impact on working capital and suggest two SCM levers to reverse the trend. Model Answer: The cash-to-cash cycle = Inventory Days + Receivables Days – Payables Days. It measures the time between paying suppliers for raw materials and receiving cash from customers. A shorter cycle is better. By: SCM Academic Resources Example: A company with