Solutions to Web Appendix 16A

Solutions to Web Appendix 16A - InventoryManagement...

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Web Appendix 16A Inventory Management Answers to Questions 16A-1 Errors in establishing inventory levels quickly lead either to lost sales or to excessive carrying costs;  thus, inventory management is as important as it is difficult.   There are costs associated with  holding too little inventory, and these costs can be severe.  Generally, if a business carries small  inventories, it must reorder frequently.  This increases ordering costs.  Even more important, firms  can miss out on profitable sales, and also suffer a loss of goodwill that can lead to lower future  sales.  So, it is important to have enough inventory on hand to meet customer demands. 16A-2 Proper   inventory   management   requires   close   coordination   among   the   sales,   purchasing,  production, and finance departments.  The sales/marketing department is generally the first to spot  changes   in   demand.     These   changes   must   be   worked   into   the   company’s   purchasing   and  manufacturing schedules, and the financial manager must arrange any financing needed to support 
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This note was uploaded on 03/21/2010 for the course BUSINESS AB102 taught by Professor Woo during the Spring '10 term at Nanzan.

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Solutions to Web Appendix 16A - InventoryManagement...

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