Given Business Requirements, Determine Principles to Support Applicable Inventory Model AGENTFORCE-FIELD-SERVICE-CONSULTANT Practice Questions (Page 4)

Questions 16–20

1. 16application · medium

   A food manufacturer purchases raw cocoa beans at fluctuating prices throughout the year. During a period of rising prices, the company wants to minimize its reported cost of goods sold (COGS) to show higher profits to investors. Which inventory valuation method would achieve this objective?

   • AFIFO (First-In, First-Out)
   • BSpecific identification
   • CWeighted average cost
   • DLIFO (Last-In, First-Out)
   Reveal Solution Discussion Select an answer first
2. 17expert · hard

   A company sells perishable goods and uses FIFO for financial reporting. During a period of rising purchase prices, the company's tax liability increases because FIFO results in higher reported profits. The CFO wants to reduce the tax burden. Which action is most appropriate, considering both financial and operational constraints?

   • ASwitch to weighted average cost to reduce the tax burden.
   • BSwitch to LIFO for tax reporting, if permitted by the local accounting standards, to increase COGS and reduce taxable income.
   • CIncrease the physical quantity of inventory purchased to lower the average cost.
   • DKeep FIFO and accept the higher tax liability because changing methods is not allowed.
   Reveal Solution Discussion Select an answer first
4. 18foundation · easy

   What is the primary trade-off when a company decides to increase its service level from 95% to 99%?

   • ALower ordering costs versus higher stockout costs
   • BHigher ordering costs versus lower holding costs
   • CHigher inventory holding costs versus lower stockout costs
   • DLower inventory holding costs versus higher stockout costs
   Reveal Solution Discussion Select an answer first
5. 19application · medium

   An online retailer sells winter clothing. Historical sales data shows a consistent 20% year-over-year growth, but sales spike dramatically from November through January each year. The company is selecting an inventory model for the upcoming season. Which forecasting approach best supports this decision?

   • AUse last year's winter sales figures without adjustment.
   • BUse a time-series model that incorporates both the annual trend and seasonal indices for the winter months.
   • CUse a qualitative forecast based on the purchasing manager's intuition.
   • DUse a simple moving average of the last 12 months of sales data.
   Reveal Solution Discussion Select an answer first
6. 20expert · hard

   A national retailer operates 50 regional warehouses. Each warehouse currently holds its own safety stock for a line of high-value electronics. The company is considering centralizing this inventory into one national distribution center (DC) to reduce total safety stock. However, the DC would be farther from customers, increasing delivery lead times. Which principle should guide this decision?

   • ACentralization reduces total safety stock due to risk pooling, but the service-level impact of longer lead times must be modeled before deciding.
   • BCentralization always reduces total inventory and should be implemented immediately.
   • CThe decision should be based solely on the cost of transportation between warehouses.
   • DDecentralization is always better because it provides faster customer service.
   Reveal Solution Discussion Select an answer first