ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -T/F The objective of inventory management is to minimize holding costs. False. The objective of inventory management is to minimize total cost, which includes ordering costs and sometimes purchase costs (e.g. quantity discount models).
Detailed explanation-2: -The objectives of inventory management are to provide the desired level of customer service, to allow cost-efficient operations, and to minimize the inventory investment.
Detailed explanation-3: -The goal is to increase sales and reduce the required amount of inventory so that the turnover ratio increases. Another important strategy to minimize holding costs and other inventory spending is to calculate a reorder point, or the level of inventory that alerts the company to order more inventory from a supplier.