Question

High inventory turnover indicates?

1) That you are ordering drugs in quantities that are too small and have to reorder too often
2) That you are ordering too many drugs; they are becoming outdated before they can be used, and must be discarded and replaced
3) An efficient and well run pharmacy
4) That too much space and capital are tied up in inventory

Answer 1

High inventory turnover is a sign that a pharmacy is efficiently managing its inventory, ensuring that drugs are sold and replaced quickly, which minimizes waste and ties up less capital.

Step-by-step explanation:

High inventory turnover typically indicates an efficient and well-run pharmacy. This measure reflects how quickly a company sells and replaces its inventory within a given period. A high turnover rate suggests that the pharmacy is effectively managing its inventory levels and has a steady flow of sales. It means that the drugs are not sitting on the shelves but are instead being sold and replaced quickly, which can contribute to a reduction in waste due to expired products and can also result in lower holding costs.

In contrast, low inventory turnover might suggest overstocking or issues with product demand leading to excess inventory that ties up capital and may eventually become outdated. Therefore, amongst the options provided, the correct answer to what high inventory turnover indicates is 3) An efficient and well-run pharmacy.