Assuming That Inventory Is Used Up at a Constant Rate

question 92

True/False

Assuming that inventory is used up at a constant rate and safety stock is zero, the average inventory will be half the re-order size.
Since safety stock = 0, and (EOQ/2) + Safety stock = Average inventory, then we carry one half that amount.

Grasp the principles of the sustainable growth rate and its implications for business expansion without new equity.

Understand the role of working capital decisions in financial management.

Identify the importance of setting a planning horizon and formulating financial policies as part of the strategic financial planning process.

Recognize the limitations of financial planning models and approaches.

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