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Importance of Inventory Management in Business

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Importance of Inventory Management in Business

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Questions and Answers

What is the purpose of inventory management?

To keep track of stock levels and monitor the flow of goods (correct)
To reduce the risk of inventory obsolescence
To minimize the need for regular inventory measurement and counting
To increase the number of products in a warehouse

What are the potential risks associated with having a large inventory?

Increased sales and customer satisfaction
Decreased sales and an increase in liability (correct)
Improved product quality and supplier relationships
Reduced risk of theft and damage

Which inventory management method is required by the SEC for public companies?

Days Sales of Inventory
JIT
LIFO Reserve (correct)
Material Requirement Planning

What can frequent inventory write-offs indicate about a company?

The company is prone to inventory obsolescence (C) Signup and view all the answers

What is the importance of inventory management for businesses?

It helps businesses maintain accurate records of their supplies and prices (B) Signup and view all the answers

Which of the following is NOT a benefit of inventory management?

Reduced need for customer-centricity (B) Signup and view all the answers

What does inventory management involve?

Managing the flow of raw materials from procurement to finished products (A) Signup and view all the answers

Which aspect of inventory management is crucial for minimizing overstocks and improving efficiency?

Managing the flow of raw materials (D) Signup and view all the answers

What is one of the main goals of proper inventory management?

Minimizing overstocks and improving efficiency (D) Signup and view all the answers

How can businesses account for their inventory?

Using first-in-first-out, last-in-first-out, weighted-average, and first-in-first-out methods (B) Signup and view all the answers

Which industry example highlights the need for efficient inventory management due to the nature of its products?

Oil depot storing inventory for a long time (D) Signup and view all the answers

What is the role of inventory management software in businesses?

Automating the process of ordering, storing, and optimizing goods (D) Signup and view all the answers