Which One of the Following Statements Represents an Advantage of the P

question 205

Multiple Choice

Which one of the following statements represents an advantage of the P system over the Q system?

• A) Less safety stock is carried to achieve the same service level.
• B) The replenishment intervals can be more easily individualized for items.
• C) Orders can be more easily combined to the same supplier.
• D) A P system is more suitable for quantity discounts and capacity limitations.

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Definitions:

First-In, First-Out

An inventory valuation method that assumes goods are sold in the order they are acquired, so the oldest inventory items are sold first.

Process Costing

A costing methodology used in industries where production is continuous, assigning costs to masses of similar units.

Materials

Raw inputs or components that are used in the production of goods or delivery of services.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, which are incurred to turn raw materials into finished goods.