The General Formula for Calculating the Inventory Reorder Point Is

question 128

Multiple Choice

The general formula for calculating the inventory reorder point is

• A) average inventory usage rate multiplied by lead time.
• B) economic order quantity less average inventory usage rate.
• C) lead time multiplied by economic order quantity.
• D) lead time multiplied by average inventory turnover rate.

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Definitions:

Accounts Receivable

The amount due to a company from its clients for goods or services rendered that remain unpaid.

Sales Returns

Goods returned by customers to the seller for refund or exchange due to defects, dissatisfaction, or other reasons.

Cash Discounts

Reductions in the amount owed by a customer if payment is made within a specified period, incentivizing early payment.

Direct Write-off Method

A method for managing uncollectible accounts where specific debts are directly written off against income at the time they are deemed unrecoverable.