What Is the Goal of Inventory Management

question 87

Multiple Choice

What is the goal of inventory management?

• A) to always buy the cheapest raw material
• B) to buy as much as possible
• C) to hold as much as possible in stock
• D) to hold down costs and maintain accurate levels of inventory

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Definitions:

Product Cost

The total of all costs associated with making a product, including raw materials, labor, and overhead.

Factory Machinery

Refers to the set of equipment and mechanical devices used in a manufacturing plant to produce goods.

Electricity

A form of energy resulting from the existence of charged particles such as electrons or protons, often used as a power source.

Factory Overhead

All indirect costs associated with manufacturing, apart from direct materials and direct labor costs.