The Objective of Inventory Management Is to Minimize Inventory Costs

question 117

Multiple Choice

The objective of inventory management is to minimize inventory costs while

• A)having only enough supplies on hand as needed for production or resale.
• B)increasing stockouts.
• C)eliminating safety stock.
• D)maintaining an adequate supply of goods to satisfy customers.
• E)facilitating electronic data interchange.

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Definitions:

Net Present Value Method

A financial analysis technique that discounts all cash flows associated with a project to their present value to help assess the project's profitability.

Capital Investment Analysis

Involves evaluating the potential profitability and risks of investments made in long-term assets to determine their feasibility and impact on a company’s future.

Average Rate of Return

It calculates the return, generated over a period of time, of an investment compared to the initial investment.

Net Present Value Method

A method in capital budgeting that evaluates an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.