An Effective Inventory Management System ______

question 37

Multiple Choice

An effective inventory management system ______.

• A)will produce reliable demand forecasts and estimates of lead times and inventory costs
• B)will attempt to reprice items such that inventory of finished products is minimized
• C)will use the push system in some seasons and pull system in other seasons to balance demand and supply
• D)will help identify the right markets for its products

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, reflecting the portion of sales that helps cover fixed costs and generate profit.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, such as lease payments and salaries of permanent staff.

Net Income

The profit remaining after all expenses, taxes, and costs have been subtracted from total revenue.

Variable Expenses

Costs that vary in direct proportion to changes in an organization's activity level or volume of output.