ACCA Applied Knowledge · Business and Technology · The impact of advances in technology
A retailer automates its purchase ordering so that orders are raised automatically when inventory falls to a set reorder level. Which is the most likely benefit for the retailer?
The likely benefit is a lower risk of stock-outs and fewer manual processing errors, because orders are triggered consistently at the reorder level. Automation does not remove the need for internal controls and cannot guarantee the lowest prices from suppliers.
- AReduced risk of stock-outs and fewer manual processing errorsCorrect
- BElimination of the need for any internal controls over purchasing
- CGuaranteed lowest purchase prices from all suppliers
Explanation
Automatic reordering at a set level reduces delays and keying mistakes, so stock-outs become less likely. Automation does not remove the need for controls, such as authorisation of supplier terms and review of exceptions, and it cannot guarantee the lowest prices.
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