In Reviewing the Appropriateness of the Minimum Quantity Level of Inventory

question 462

Multiple Choice

In reviewing the appropriateness of the minimum quantity level of inventory established by a department, an auditor would be least likely to consider:

• A) Stockout costs, including lost customers.
• B) Seasonal variations in forecasting inventory demand.
• C) Optimal order sizes determined by an economic order quantity model.
• D) The potential for obsolescence of inventory items.

---

Definitions:

Permanent Injunction

A court order prohibiting offending conduct.

Statutory Damages

A new remedy enabling a court to award damages that it “considers just” under the circumstances, without requiring proof of damage or lost profits.

Punitive Damages

Damages in excess of the plaintiff’s actual losses, intended to punish the wrongdoer for outrageous or extreme behaviour; also known as exemplary damages.

Enhanced Injunction

A more forceful or comprehensive court order to prevent an action or to impose conditions on certain behaviors.