Asked by Ahmed Nasser on Jun 24, 2024
Verified
Which of the following inventory management techniques would work best for firms where a small portion of inventory in terms of quantity might represent a large portion in terms of inventory value?
A) ABC approach.
B) EOQ model.
C) Materials requirements planning.
D) Just-in-time approach.
E) Aging approach.
Inventory Management
The supervision of non-capitalized assets and stock items, including the management of ordering, storing, and using a company's inventory.
ABC Approach
A methodology used in inventory management and cost accounting that prioritizes items based on their importance, cost, or another criterion, often categorized into A, B, and C groups.
- Appreciate the justification for opting for particular inventory management practices based on the strategic direction of the company and its operational efficiency.
Verified Answer
AF
amira foudaJun 28, 2024
Final Answer :
A
Explanation :
The ABC approach is most suitable for situations where a small portion of inventory represents a large portion of the inventory value. This technique categorizes inventory into three classes (A, B, and C) based on its importance and value, with "A" items being the most valuable and requiring the most attention. This allows firms to focus resources and management efforts on the most critical items.
Learning Objectives
- Appreciate the justification for opting for particular inventory management practices based on the strategic direction of the company and its operational efficiency.
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