Inventory and Cost Control Flashcards

A practice orders 200 units of flea prevention monthly at $8 each. Holding cost is $0.50/unit/month and ordering cost is $25/order. What is the EOQ?

Answer: 141 units

EOQ = √(2 × 200 × $25 / $0.50) = √(20,000) ≈ 141 units.

Which of the following best describes 'dead stock' in a veterinary inventory context?

Answer: Items that have not sold within a defined period and are unlikely to sell

Dead stock refers to inventory that has remained unsold for an extended period and has little prospect of future sale.

A practice's average inventory value is $40,000 and annual COGS is $320,000. What is the inventory turnover rate?

Answer: 8 times

Inventory turnover = COGS / average inventory = $320,000 / $40,000 = 8 times per year.

Which controlled substance schedule in the US includes drugs with the highest accepted medical use but still significant abuse potential, such as ketamine?

Answer: Schedule III

Ketamine is classified as a Schedule III controlled substance, indicating accepted medical use with moderate-to-low physical dependence risk.

What is the main advantage of a perpetual inventory system over a periodic one?

Answer: It provides real-time stock level data

A perpetual inventory system updates stock levels continuously with each transaction, providing real-time visibility into inventory.

A practice pays $15 per unit for a heartworm preventive and charges clients $35. What is the gross margin percentage?

Answer: 57.1%

Gross margin % = (($35 − $15) / $35) × 100 = 57.1%.

When evaluating supplier contracts, which factor most directly affects the total landed cost of an inventory item?

Answer: Shipping fees, minimum order requirements, and payment terms

Landed cost includes the product price plus all shipping fees, minimum order requirements, and any financing costs from payment terms.