Safety Stock

question 8

Multiple Choice

Safety stock

• A)can be determined by the EOQ formula.
• B)depends on the inventory position.
• C)depends on the variability of demand during lead time.
• D)is not needed if Q* is the actual order quantity.

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Definitions:

LIFO

Last-In, First-Out method, an inventory valuation technique where the latest items added to inventory are the first ones to be used or sold.

External Financial Reporting

The process of disclosing financial information to external stakeholders, such as investors or regulators, through reports like balance sheets and income statements.

Inventory Accounting Methods

Inventory accounting methods determine the cost of goods sold and ending inventory value, including techniques like FIFO, LIFO, and weighted average cost.

LIFO Layers

In the Last-In, First-Out inventory accounting method, layers of inventory purchased at different times (and prices) which can affect the cost of goods sold and ending inventory valuation.