Which of the Following Is a Disadvantage of Excessive Inventory

question 23

Multiple Choice

Which of the following is a disadvantage of excessive inventory?

• A)it creates an unnecessary waste of scarce resources.
• B)It leads to higher inventory ordering cost.
• C)It leads to lower average inventory.
• D)It eliminates cycle stock.
• E)It reduces the need to conduct cycle count.

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Definitions:

Fixed Cost

A cost that remains constant, regardless of changes in the level of production or sales activities.

Factory Supervisor

An individual responsible for overseeing the production process and workers in a manufacturing setting.

Merchandising Company

A merchandising company is a business that purchases finished products and sells them to consumers, without altering the product's form.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.