For each of following businesses, provide your recommendation for the type of inventory system (perpetual or periodic).
Question:
a. A supermarket that has 10,000 products and inventory turnover of 50 times per year.
b. An ice cream store that makes its only products on site and sells by the scoop.
c. A car dealership.
d. An electronics store.
Step by Step Answer:
Feasible to track inventory continuously Benefit of continuous inventory tracking Co...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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