In most situations, the higher the inventory turnover rate, the better. In her March 3, 20...

In most situations, the higher the inventory turnover rate, the better. In her March 3, 2003, BusinessWeek article, “Q & A: Putting a Tech Giant Back on Its Feet,” Faith Keenan wrote:

Data storage company EMC Corporation had plenty of fat in its operations before the tech downturn hit. Inventory turned over just four times a year, while competitors moved goods several times faster.

EMC's inventory turnover statistic was low because company policy was to test its data storage devices for 28 days before selling them to customers. Most of the firm's competitors tested their products for only 7 days before selling them. When EMC made a decision to shorten its testing , period, its inventory turnover statistic improved.

Instructions

Discuss the trade-offs EMC's management had to consider in making its decision to shorten the company̕ s product testing period.