The ABC Approach to Inventory Management Is Based on the Concept

question 57

Multiple Choice

The ABC approach to inventory management is based on the concept that:

• A)inventory should arrive just in time to be used.
• B)the inventory period should be constant for all inventory items.
• C)basic inventory items that are essential to production and also inexpensive should be ordered in small quantities only.
• D)a small percentage of the inventory items probably represents a large percentage of the inventory cost.
• E)one-third of a year's inventory need should be on hand, another third should be on order, and the last third should not be ordered yet.

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Definitions:

Consumer Surplus

The difference between the highest price a consumer is willing to pay for a good or service and the actual price they pay.

World Trade Organization

An international organization that regulates trade between nations, aiming to ensure trade flows as smoothly, predictably, and freely as possible.

Trade Concessions

Agreements or compromises in international trade where one country offers reductions in tariffs or other trade barriers to another country, often to foster better relations or gain economic benefits.

Member Country

A country that is part of a larger group or organization, such as the United Nations, the European Union, or any other international coalition with specific membership criteria.