Question

Choose the correct answer Choose the correct answer

A. By increase in number of warehouses, cost of lost sales will increase
B. Shorted order cycle time can improve ROI by improving cash and receivable timing.
C. Most of the logistics outsourcing activities are fleet management and supply chain consultancy services
D. Higher level of inventory can always improve the ROI

Answer 1

Shortening the order cycle time can improve ROI by improving cash and receivable timing.

Step-by-step explanation:

ROI stands for Return on Investment, which is a measure of the profitability of an investment. Shortening the order cycle time means reducing the time it takes for orders to be processed and fulfilled. This can have several benefits:

1. Improved cash flow: When orders are processed and fulfilled quickly, the company can receive payments from customers sooner, improving cash flow.
2. Reduced receivable timing: By shortening the order cycle time, the company can also reduce the time it takes for customers to pay their invoices. This improves receivable timing and ensures that the company's accounts receivable are collected in a timely manner.
3. Increased efficiency: Shortening the order cycle time can also lead to increased efficiency in other areas of the supply chain, such as inventory management and production planning. This can improve overall ROI by reducing costs and increasing productivity.

Therefore, by shortening the order cycle time, a company can improve its ROI by improving cash flow, reducing receivable timing, and increasing efficiency.