Inventory Costs at 14% and Habitual Use of Reorder Points

question 37

Multiple Choice

Inventory costs at 14% and habitual use of reorder points are two factors in inventory management that would indicate:

• A) that the practice is ordering drugs in quantities that are too small and must reorder too often
• B) that the practice is ordering too many drugs that are expiring before they can be used
• C) an efficient and well-run inventory program
• D) that too much space and capital are tied up in inventory

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Definitions:

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, businesses, and investors.

Required Return

The minimum rate of return on an investment that investors expect to compensate them for the level of risk.

Beta

A measure of a stock's volatility relative to the overall market, indicating its risk compared to the market average.

Risk-free Rate

The return on investment with no risk of financial loss, often represented by the yield on government securities.