Answer :
To calculate the company's average inventory using Little's Law, we can use the formula: Average Inventory (I) = Average Flow Rate (R) * Average Time spent in the system (T). the company's average inventory is 20,000 bottles of wine.
In this case, the average flow rate is given as 10,000 bottles of wine per month, and the inventory turnover rate (TTR) is 6 times per year.
To find the average time spent in the system (T), we divide the number of months in a year (12) by the inventory turnover rate (6), resulting in an average time of 2 months.
Now we can calculate the average inventory:
Average Inventory (I) = Average Flow Rate (R) * Average Time spent in the system (T)
I = 10,000 bottles/month * 2 months
I = 20,000 bottles.
Therefore, the company's average inventory is 20,000 bottles of wine.
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