Inventory Decisions

Nike’s Purchasing, Stock & Markdown Risks

Learn to read inventory as capital at risk, calculate a cautious turnover proxy, separate physical stock from accounting valuation, and design purchasing controls. Nike’s historical disclosures provide the evidence; separate hypothetical exercises test operational choices. FY2024 ended May 31, 2024; FY2023 comparison ended May 31, 2023; USD millions unless labeled. Inventory and annual cost-of-sales values cross-checked between the Form 10-K and the June 27 earnings release. Two-point average inventory is a coarse proxy, not reported inventory days. SKU availability, inventory age and markdown elasticity are not disclosed in the inputs; no claim about these is inferred.

What you will learn

• Distinguish inventory stocks from annual cost flows.
• Calculate an inventory turnover and days proxy with explicit limitations.
• Explain why a stock reduction is not automatically cash collected.
• Evaluate markdown and purchasing tradeoffs using a bounded test.
• Write an inventory decision memo with observable safeguards.

Syllabus

1. 1Identify what inventory actually measures10 min
2. 2Build a turnover proxy that survives scrutiny10 min
3. 3Separate stock releases from cash receipts10 min
4. 4Treat markdowns as a bounded decision10 min
5. 5Design purchasing controls around uncertainty10 min
6. 6Write an inventory memo with explicit limits10 min
7. CBusiness case: Nike: Clear Stock or Protect Availability?20 min