Inventory record accuracy would be decreased by
Options:
- Abc analysis.
- Increasing stockroom accessibility.
- Cycle counting.
- reorder points.
The Correct Answer Is:
b. Increasing stockroom accessibility.
Inventory record accuracy refers to the precision and reliability of the information contained in a company’s inventory records. Maintaining accurate inventory records is crucial for efficient operations, cost control, and customer satisfaction.
Let’s analyze each option to understand why increasing stockroom accessibility would decrease inventory record accuracy and why the other options are not the correct answer.
Correct Answer Explanation: b. Increasing Stockroom Accessibility
Increasing stockroom accessibility can lead to a higher risk of errors and discrepancies in inventory records. When stockroom accessibility is increased without appropriate controls and monitoring systems, there is a higher likelihood of unauthorized personnel accessing the inventory.
This can result in misplaced items, incorrect documentation, and even theft. Frequent and unregulated access may disrupt the organized arrangement of goods, leading to difficulties in tracking and updating inventory records accurately.
Therefore, while accessibility is essential for operational efficiency, it needs to be balanced with proper controls to prevent negative impacts on inventory accuracy.
Increasing stockroom accessibility without implementing adequate checks and balances can inadvertently expose the inventory to human error and irregularities.
When accessibility is heightened without corresponding control measures, there’s a greater probability of mishandling items, misplacements, or unauthorized access, which can significantly impact the integrity of inventory records.
The lack of stringent access controls might lead to discrepancies between the actual physical count and the recorded inventory levels, making it challenging to maintain accurate and up-to-date records.
Hence, while accessibility is important for operational fluidity, ensuring proper oversight and security measures is equally crucial to uphold inventory record accuracy.
Explanation of why the other options are incorrect:
Lets delve deeper into incorrect options one by one in detail below:
a. ABC Analysis
ABC analysis is a method of categorizing inventory items based on their importance. It involves classifying items into three categories: A (high-value, low-quantity), B (moderate-value, moderate-quantity), and C (low-value, high-quantity).
ABC analysis itself does not directly impact inventory record accuracy. Instead, it is a valuable tool for prioritizing inventory management efforts based on the importance of items. Therefore, ABC analysis is not expected to decrease inventory record accuracy when implemented correctly.
c. Cycle Counting
Cycle counting is a method of regularly auditing a subset of inventory items, usually on a recurring schedule. This approach allows for the identification of discrepancies between physical stock and recorded quantities.
When properly executed, cycle counting contributes to maintaining and improving inventory record accuracy by identifying and addressing discrepancies in a timely manner. Therefore, cycle counting is not a factor that would decrease inventory record accuracy.
d. Reorder Points
Reorder points are predetermined inventory levels at which new stock should be ordered. Setting reorder points is part of effective inventory management and helps prevent stockouts.
While inaccurately set reorder points could lead to overstock or stockouts, the concept itself is not inherently a cause of decreased inventory record accuracy. It is more about establishing appropriate levels to ensure smooth operations and customer satisfaction.
Increasing stockroom accessibility is the correct answer because, without proper controls, it can introduce errors and discrepancies in inventory records.
On the other hand, ABC analysis, cycle counting, and reorder points are all methods or tools that, when implemented correctly, contribute to better inventory management and do not inherently lead to decreased inventory record accuracy.
It’s crucial to strike a balance between accessibility and control to ensure that inventory records remain accurate and reliable.
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MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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