The Main Objective of Material Planning Is

question 84

Multiple Choice

The main objective of material planning is

• A)To minimize the expenses for storing excess inventory.
• B)To balance the demand for materials with the supply.
• C)To shorten the duration of the procurement cycle.
• D)To eliminate excess inventory.
• E)To prevent lost sales.

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Definitions:

First-In, First-Out

An inventory valuation method that assumes that the first items placed in inventory are the first items sold, ideal for products that are perishable or have a short shelf life.

Predetermined Overhead Rate

A rate calculated before a period begins, based on the estimated overhead costs and estimated activity base, used to allocate overhead costs to products or services.

Direct Labor Costs

Expenses attributed to the payment of employees directly involved in the production of goods or services.

Machine Hours

A measure of the amount of time a machine is operated, used in allocating manufacturing overhead costs.