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Question 481 - CSCP discussion

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A company finds that one of its warehouses is out of capacity to store products. Expanding the physical size of the warehouse is not an option. The most appropriate solution would be to increase the:

A.
cash-to-cash cycle of slow-moving items.
Answers
A.
cash-to-cash cycle of slow-moving items.
B.
inventory turn of slow-moving items.
Answers
B.
inventory turn of slow-moving items.
C.
use of break-bulk warehousing.
Answers
C.
use of break-bulk warehousing.
D.
inventory days of supply of fast-moving items
Answers
D.
inventory days of supply of fast-moving items
Suggested answer: B

Explanation:

When a warehouse reaches its capacity and expanding the physical space is not an option, increasing the inventory turn of slow-moving items is the most appropriate solution. Here's why:

Inventory Turn: This measures how frequently inventory is sold and replaced over a period. Increasing inventory turn means reducing the amount of time products stay in the warehouse.

Slow-Moving Items: These items contribute significantly to storage space issues. By focusing on increasing the turn rate of these items, you can free up space for faster-moving goods.

Efficient Use of Space: By increasing the turnover of slow-moving items, you avoid the need for additional storage space and ensure that the warehouse is utilized more effectively.

Improved Cash Flow: Higher inventory turnover rates help in converting stock into cash more quickly, improving the company's liquidity. In essence, managing slow-moving inventory more efficiently helps to optimize the use of existing warehouse space without the need for physical expansion.

Reference:

'Inventory Management Strategies to Reduce Warehouse Costs' - Supply Chain Quarterly

'Improving Inventory Turnover Rates' - Journal of Business Logistics

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asked 16/09/2024
Adilson Jacinto
36 questions
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