ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
The main purpose of establishing a reorder point is to:
|
|
avoid purchasing too much inventory if projections are incorrect
|
|
|
avoid a stockout situation
|
|
|
maintain adequate anticipation stock
|
|
|
reduce the company’s carrying costs
|
Explanation:
Detailed explanation-1: -A reorder point is crucial for effective inventory management. It saves holding costs and prevents stockouts, overstocking, and lost sales by ensuring that sufficient stock is always available in your inventory.
Detailed explanation-2: -Safety stock is an extra quantity of a product which is stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand.
Detailed explanation-3: -Reorder levels are critical for efficient inventory management. Not only does it help you reduce carrying costs, but it also helps prevent both overstocking and understocking, and ensures you have adequate stock to meet customer demand so that you don’t lose sales.
There is 1 question to complete.