Which of the Following Is NOT an Advantage of Using

question 59

Multiple Choice

Which of the following is NOT an advantage of using a distribution center?

• A) More accurate sales forecasts are possible.
• B) Retailers need to keep less merchandise in the store as inventory if the stores get frequent deliveries.
• C) It is easier to avoid stock-outs.
• D) Use of a distribution center saves money since the storage space at a distribution center is generally less expensive than that of a store.
• E) Customers know they are dealing with a more sophisticated and financially well-off operation if the firm uses a distribution center.

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Definitions:

Perpetual Inventory System

A method of inventory management where updates to inventory records are made immediately following each transaction, providing a continuous record of inventory levels.

Terms 1/10, n/30

A payment term indicating that a buyer can take a 1% discount on the invoice amount if payment is made within 10 days, otherwise the full (net) amount is due in 30 days.

Inventory Sold

The quantity of products or merchandise that a company has sold to its customers; these goods have been moved out of inventory and recognized as revenue.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, typically at the end of an accounting period, rather than after each transaction.