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Questions and Answers
A company implements a system where it physically counts its entire inventory at the end of each quarter. Which inventory system is the company using?
A company implements a system where it physically counts its entire inventory at the end of each quarter. Which inventory system is the company using?
- Periodic Inventory System (correct)
- ABC Analysis System
- Perpetual Inventory System
- Just-in-Time Inventory System
A company uses the last in, first out (LIFO) method for inventory valuation. In a period of rising costs, how will this method affect the company's reported net income?
A company uses the last in, first out (LIFO) method for inventory valuation. In a period of rising costs, how will this method affect the company's reported net income?
- Increase net income by 50%
- Decrease net income (correct)
- Increase net income
- Have no material impact on net income
A retail store experiences unexpected surges in customer demand due to a viral marketing campaign. Which inventory management strategy would best mitigate potential stock outs during this period?
A retail store experiences unexpected surges in customer demand due to a viral marketing campaign. Which inventory management strategy would best mitigate potential stock outs during this period?
- Switching to a just-in-time (JIT) inventory system.
- Relying solely on economic order quantity (EOQ) calculations.
- Reducing safety stock levels to minimize holding costs.
- Increasing safety stock levels of the affected items. (correct)
An online retailer categorizes its products into 'A', 'B', and 'C' based on their sales revenue. 'A' items represent 80% of the revenue, 'B' items 15%, and 'C' items 5%. What inventory management technique is being applied?
An online retailer categorizes its products into 'A', 'B', and 'C' based on their sales revenue. 'A' items represent 80% of the revenue, 'B' items 15%, and 'C' items 5%. What inventory management technique is being applied?
A manufacturing company ships raw materials from its supplier. While the materials are on a truck en route to the company's warehouse, how is this inventory classified?
A manufacturing company ships raw materials from its supplier. While the materials are on a truck en route to the company's warehouse, how is this inventory classified?
A small business refills its vending machines every Monday regardless of how many items have been sold. What inventory model are they employing?
A small business refills its vending machines every Monday regardless of how many items have been sold. What inventory model are they employing?
A bakery uses the FIFO method for valuing its inventory of flour. Why might the bakery choose this method?
A bakery uses the FIFO method for valuing its inventory of flour. Why might the bakery choose this method?
A company aims to optimize its supply chain to reduce costs and improve efficiency from raw materials to finished goods. Which management process should it focus on?
A company aims to optimize its supply chain to reduce costs and improve efficiency from raw materials to finished goods. Which management process should it focus on?
A toy store needs to determine the optimal level of teddy bears to keep in stock. What is the primary consideration when balancing customer demand and inventory levels?
A toy store needs to determine the optimal level of teddy bears to keep in stock. What is the primary consideration when balancing customer demand and inventory levels?
A clothing retailer performs a physical count of its inventory and discovers that the amount of clothing on hand is less than what its records indicate. What term describes this discrepancy?
A clothing retailer performs a physical count of its inventory and discovers that the amount of clothing on hand is less than what its records indicate. What term describes this discrepancy?
Flashcards
Inventory Management
Inventory Management
Overseeing, controlling, and managing stock levels within a business.
Periodic Inventory System
Periodic Inventory System
Inventory is counted and updated at fixed, regular intervals (e.g., monthly).
LIFO (Last-In, First-Out)
LIFO (Last-In, First-Out)
An inventory valuation method where the latest (newest) inventory is assumed to be sold first.
Safety Stocks
Safety Stocks
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ABC Analysis
ABC Analysis
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In Transit Inventory
In Transit Inventory
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Fixed Time Period Model
Fixed Time Period Model
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FIFO (First-In, First-Out)
FIFO (First-In, First-Out)
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Supply Chain Management
Supply Chain Management
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Reordering Point
Reordering Point
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Study Notes
- Inventory management oversees and controls stock levels within a business.
- The periodic inventory system involves counting inventory at regular intervals like monthly or annually.
- LIFO assumes the newest stock is sold or used first.
- Safety stocks serve as a buffer to prevent stock outs.
- ABC analysis categorizes products based on their value to optimize inventory management.
- In transit inventory refers to stock stored while being transported.
- The fixed time period model replenishes inventory at fixed intervals, regardless of stock levels.
- FIFO assumes the oldest stock is sold or used first.
- Supply chain management involves managing suppliers, materials, and finished products in a business.
- Demand and supply balancing maintains inventory levels relative to customer demand to prevent stock outs.
- The reordering point involves placing an order including paperwork, supplier communication, and transportation.
- Inventory reconciliation compares physical inventory counts to recorded stock levels.
- Ordering cost covers the expenses of placing an order, including paperwork, supplier communication, and transportation.
- Inventory shrinkage accounts for inventory loss due to theft, damage, or administrative errors.
- The weighted average cost (WAC) method uses an average cost for all available goods for inventory valuation.
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