The Optimal Level of Inventories Is the Level at Which

question 311

True/False

The optimal level of inventories is the level at which the extra cost (in lost sales) from lowering inventories by a small amount is greater than the gain (in interest revenue and decreased storage costs).

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Definitions:

Customers Served

The number of clients or customers that a company has provided services or goods to within a specific period.

Budgeting

The process of creating a plan to spend your money, allowing you to determine in advance whether you will have enough money to do the things you need or would like to do.

Flexible Budget

A budget that adjusts to changes in the volume of activity, providing a more useful comparison of actual to budgeted costs for different levels of activity.

Customers Served

The total number of customers who purchase or consume services within a specific time period.