Certified Government Financial Manager (CGFM) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 875

Which of the following is a common focus of manufacturing activities?

Inventory difference ratio

Days of supply on hand

Days of supply on hand is a crucial metric in manufacturing that indicates the number of days a company can continue to operate using its current inventory without needing to restock. This measure helps manufacturers understand their inventory levels in relation to production schedules and customer demand. By monitoring days of supply on hand, manufacturers can optimize their inventory management, ensuring they have enough materials to meet production needs while avoiding excess stock that can tie up capital and increase storage costs.

In the context of manufacturing activities, focusing on days of supply on hand helps organizations balance efficiency and responsiveness, making it a critical aspect of overall operational strategy. It directly impacts production planning, supplier relationships, and cost management, which are all essential components of successful manufacturing operations.

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Active stock levels

Dollar amount of unfilled orders

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