ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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average inventory.
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average cost.
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average point-of-sale.
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inventory errors.
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Detailed explanation-1: -The average inventory formula is: Average inventory = (Beginning inventory + Ending inventory) / 2. However there’s more to it than simply knowing the formula. Calculating average inventory is an important part of your overall inventory strategy.
Detailed explanation-2: -Beginning Inventory = Sales (COGS) + Ending Inventory-Purchases (inventory added to stock). Sales (COGS) is the cost of goods sold, ending inventory is the inventory value at the end of the accounting period, and purchases are the total value of inventory added to stock during the accounting period.
Detailed explanation-3: -To manage fluctuation in demand, organizations usually set safety stocks of finished goods to help buffer fluctuating demand as it arrives from the market.
Detailed explanation-4: -Meaning and formula for inventory holding period An average stock = (Opening stock + Closing stock) / 2. The inventory holding period is an efficiency ratio. Efficiency ratios show how a business manages its assets and liabilities. They are an important indicator of the ability of the company to generate cash.