The Reorder Point Is the Level of Inventory That Prompts

question 75

True/False

The reorder point is the level of inventory that prompts a new order to be placed in a continuous inventory system.

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Definitions:

Capital Cost

The upfront expenditure required to acquire or improve fixed assets such as buildings, machinery, or equipment, contributing to the productive capacity of a firm.

Hurdle Rate

The minimum rate of return on an investment that a business requires before it will proceed with the project.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Fixed Order Interval

A replenishment method where orders are placed at fixed intervals, ensuring a periodic review and stock refill.