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Chapter 2 - Yi Chen COST ACC Chapter 2 1 What are the two...

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Yi Chen COST ACC 10/26/2011 Chapter 2 1. What are the two major objectives of materials control? The two basic aspects of materials control are: a. the physical control or safeguarding of materials; b. control over the investment in materials. 3. What factors should management consider when determining the amount of investment in materials? In general, to effectively control materials, a business must maintain: a. limited access; b. segregation of duties; c. accuracy in recording. 4. What is the meaning of the term order point? The point at which an item should be ordered, called the order point, occurs when the predetermined minimum level of inventory on hand is reached. 5. What kind of information and data are needed to calculate an order point? Calculating the order point is based on the following data: a. usage; b. lead time; c. safety stock 6. How would you define the term economic order quantity? The optimal quantity to order at one time, called the economic order quantity, is the order size that minimizes the total order and carrying costs over a period of time.
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