Question

The "dollar days" inventory measurement results from a complex algorithm used to compute individual units of inventory and their respective ordering and holding costs.
A) True
B) False

Answer 1

The given statement is False.

Explanation:

The inventory measurement for "dollar days" can be used to focus management's attention on the location of the inventory.

Two Theory Of Constraints exist, One either soon to measure things done compared towards the drum program and another to measure things done too late. Inventory dollar days (IDD) are too early to measure things done. One dollar day is a one-day bill.

The use of dollars replaces some performance measurements that are grossly biased and express damage due to the failure to meet commitments. Thus, by definition, performance measurement is a negative measurement of the Dollar Days. The best value that can be achieved is null.