Inventory management Flashcards
1
Q
Define efficiency in inventory management
A
The ability of a business to manage its inventory by maintaining inventory at an optimal level to meet customer demand
2
Q
Importance of inventory management
A
To minimise storage cost.
To reduce chances of inventory becoming obsolete and spoilt.
3
Q
consequence of excess inventory
A
Increased risk of goods becoming obsolete
4
Q
consequence of insufficient inventory
A
A stock-out situation which results in a loss in sales.
5
Q
Rate of inventory turnover
A
Average inventory
6
Q
Days sales in inventory
A
Average inventory
————————– × 365 days
Cost of sales
7
Q
Possible reason for low efficiency in inventory management
A
Selling price may be too high.
Increased competition.
Poor inventory management, which causes the business to over stock.
8
Q
A
