murph09_im.docVIP

PART II END-OF-CHAPTER QUESTIONS CHAPTER 9: INVENTORY MANAGEMENT What is inventory turnover? How can a high inventory turnover ratio be detrimental to a firm? Inventory turnover refers to the number of times that inventory is sold in a one year period. It can be calculated by dividing the cost of goods sold for a particular period by the average inventory for that period. High inventory turnover may signal a low level of inventories, which can increase the chance of product stockouts. Distinguish among cycle, safety, pipeline, and speculative stock. Cycle (base) stock refers to inven