Problem 1:

Describe  the need for safety stock

- Demand fluctuation, delay in receipt of inventory, impact of slow delivery
- Advantages of safety stock

Problem 2:

Describe the various methods of disposing the obsolete stock
• Review inventory for obsolete items
• Create a Materials Review Board (MRB)
• Include an obsolescence review in the closing procedure
• Use computer tracking for items with a short shelf life
• Track the rework status actively

Problem 2:

Describe the several financial ratios important in financial statement analysis.

• Liquidity ratio
• Profitability ratio
• Leverage ratio
• Activity ratio