Immediate effect on the investment level of Inventory

This topic has 8 replies, 4 voices, and was last updated 4 days ago by John Moffat.

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September 22, 2022 at 3:39 pm #667002
AG1999
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Sir,

Efficiency of inventory management in warehouse is least likely to be an immediate effect on investment level of the inventory right sir?
September 22, 2022 at 3:56 pm #667003
AG1999
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AG1999 wrote:Sir,

Which of the following is least likely to immediate effect on investment level of inventory ?
The options are:
1) Efficiency of inventory management in the warehouse
2) Lead time of the supplier
3) Speed of the production process
4) Credit term agreed with suppliers

Which one is least likely one sir?
September 22, 2022 at 5:33 pm #667017
John Moffat
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The credit term agreed with suppliers is the lest likely to have an immediate effect on inventory.

(more efficient inventory management will affect the level of investment in inventory)

If this was a question in the last real exam, then please do not ask me any more because I have not yet seen the exam 🙂 (And whether you got the answer right or wrong is obviously now irrelevant anyway.)
September 23, 2022 at 5:47 am #667052
salman6565
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If i am not wrong
The credit term is most likely bcuz if the credit term of the supplier is bad then company have to keep high amount of inventory to reduce the risk of the stock out and vice versa
September 23, 2022 at 7:22 am #667060
John Moffat
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That is not true. The credit terms are simply how long the supplier is prepared to wait for payment. It does not affect how much inventory the company decides to hold.
September 23, 2022 at 11:20 am #667066
johnbriane
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Then a good credit term denotes that the supplier is prepared to wait for the payment for a longer period right sir
September 23, 2022 at 4:14 pm #667082
John Moffat
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Correct, but again it does not affect the level of inventory that they decide to hold 🙂
September 24, 2022 at 12:21 pm #667142
AG1999
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Thanks for the clarification sir
September 24, 2022 at 3:36 pm #667160
John Moffat
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You are welcome 🙂
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