Asked by Chloe Summerville on May 25, 2024
Verified
Especially for wholesalers and retailers involved in the distribution channels for consumer packaged goods, inventory management is a careful balancing act between:
A) supply and demand.
B) controlled supply and variable demand.
C) lower inventory levels and acceptable customer service levels.
D) variable inventory levels and consistent customer service levels.
Inventory Management
The supervision of non-capitalized assets and stock items, focusing on ordering, storing, and using a company's inventory.
Consumer Packaged Goods
Products that are sold in packaged form to consumers, typically involving items that are consumed daily and purchased frequently.
- Understand the intricacies of controlling inventory by mastering batching economies, cycle stock maintenance, and the influence of the Economic Order Quantity (EOQ) model on cost variations.
Verified Answer
DR
Dariela RondonMay 25, 2024
Final Answer :
C
Explanation :
Wholesalers and retailers need to maintain lower inventory levels to reduce holding costs and prevent inventory obsolescence, while also ensuring acceptable customer service levels by keeping enough stock to meet demand. This requires a careful balancing act between the two factors. Option A refers to two complementary factors rather than trade-offs, so it is not the best answer. Option B implies that wholesalers and retailers can control supply, which is not always the case in a volatile market, hence it is not a practical choice. Option D represents inconsistency in inventory levels and customer service levels, which is not desirable.
Learning Objectives
- Understand the intricacies of controlling inventory by mastering batching economies, cycle stock maintenance, and the influence of the Economic Order Quantity (EOQ) model on cost variations.
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