Practice Quiz

Supply Chain Management

Category - Inventory

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Which of the following is the best reason to justify the fact that Inventory turn and GMROI should be calculated quarterly rather than annually?
  1. Due to frequent fluctuation in sales and inventory.
  2. Due to frequent fluctuation in average and total Inventory.
  3. Due to frequent depreciation.
  4. All of the above.
Explanation
Answer: A - Inventory turn and GMROI are active metrics in SCM , as sales and inventory levels change. While they are normally calculated annually, to completely utilize them as dynamic merchandising tools it is necessary to measure them quarterly or even monthly on a rolling basis.
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