LECUTURE 5 - part 3

Question 1

Independent demand

Answer 1

inventory items whose demand are beyond a company’s complete control, demand at the customer end product level

Question 2

Dependent demand

Answer 2

demand for items that are subassemblies, components, parts, raw materials to be used in production of end products

Question 3

stock (inventory) turnover (definition)

Answer 3

inventory turnover, or the inventory turnover ratio is the number of times a business sells and replaces its stock of goods during a given period

Question 4

What is better? High or low turnover?

Answer 4

The higher the inventory, the better. High turnover typically means a company is selling goods quickly and there is demand for it.

Question 5

Inventory vaulation (4)

Answer 5

• Specific identification method
• FIFO
• LIFO
• Weighted average method

Question 6

Specific identification method (definition)

Answer 6

track the specific cost of individual items of inventory

Question 7

Weighted average method (definition)

Answer 7

average of the costs in the inventory is used in the Costs Of Goods Sold

Question 8

Period stock turn formula

Answer 8

period stock turn = closing stock / average period sales

Question 9

stock days formula

Answer 9

stock days = stock / average sales day rate