Question

When there is a high inventory turnover, there is an increase in sales because:

A. price points are set higher to accommodate for potential sales loss.
B. new merchandise is continually available to customers.
C. the merchandise begins to look shopworn.
D. sales are increased by reducing prices.
E. more money is available to buy new merchandise.

Answer 1

A high inventory turnover typically results in increased sales due to the constant availability of new merchandise, which attracts customers and implies efficient operations.

Step-by-step explanation:

When there is a high inventory turnover, there is typically an increase in sales because new merchandise is continually available to customers (option B). This availability attracts consumers who are looking for the latest products and can lead to increased customer satisfaction and repeat purchases. High turnover indicates that inventory does not sit on shelves for long periods, reducing the likelihood that items become shopworn which can detract from sales.

It's a signal that the company is selling goods rapidly, and this often correlates with strong demand and efficient operations. The connection between inventory turnover and sales is complex and is influenced by various factors including pricing strategies, market demand, and the capability of a company to manage its supply chain efficiently.