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:

Form 10-K

An annual report required by the U.S. Securities and Exchange Commission that gives a comprehensive summary of a company's performance.

Value-Relevance

The usefulness of financial information in affecting investors' decisions, including how changes in financial statement measures (like earnings and book values) impact stock market values.

Quality

The degree of excellence of a product, service, or process, often measured against standards or customer expectations.

Sustainable

The ability of something to be maintained at a certain rate or level without depleting natural resources or causing severe ecological damage.