The Amount of Safety Stock That a Firm Carries Depends

question 104

Multiple Choice

The amount of safety stock that a firm carries depends upon

• A) the predictability of inventory usage.
• B) the time period necessary to fill inventory orders.
• C) the riskiness of the storage facility.
• D) the predictability of inventory usage and the time period necessary to fill inventory orders.

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Definitions:

Operating Income

A company's profit after subtracting operating expenses, such as wages and cost of goods sold, from its gross revenue.

Return on Investments

A measure of the profitability of an investment, calculated by dividing the net profit from the investment by the total amount invested.

Budget Performance Report

A financial report comparing the actual financial activity to the forecasted or budgeted financial performance.

Variances

Differences between planned or expected financial performance and the actual performance.