Which of the Following Statements About ABC Analysis Is FALSE

question 207

Multiple Choice

Which of the following statements about ABC analysis is FALSE?

• A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
• B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have.
• C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items.
• D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
• E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.

Identify the core values that contribute to the success of companies.

Grasp the characteristics of multiculturalism and its impact on organizational culture.

Distinguish between various subcultures within organizations and their unique characteristics.

Understand the key concepts and practices of diversity leadership.

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of losing some or all of the original investment.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, amplifying both potential gains and losses.

Net Income

The total earnings of a company after subtracting all expenses from revenue, including taxes and interest.

Debt Financing

A method of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors, in return for lending the company money.