Massachusetts Pharmacy Technician License Practice Test

What term describes the rate at which inventory is ordered, viewed, or re-ordered?

1. Stock Level

2. Turnover

3. Inventory Cycle

4. Purchase Frequency

The correct answer is: Turnover

The term "Turnover" refers to the rate at which inventory is sold or used in relation to the average inventory held over a specific period of time. It indicates how efficiently a pharmacy or business manages its stock, as well as how quickly products are replenished. A higher turnover rate suggests that inventory is being sold quickly, which can contribute to better cash flow and less capital tied up in stock. While other terms such as "Stock Level," "Inventory Cycle," and "Purchase Frequency" relate to inventory management, they do not specifically denote the rate at which inventory is ordered or replenished in the same context as turnover does. "Stock Level" typically refers to the current amount of inventory on hand, "Inventory Cycle" could describe the time frame from procurement to the sale of products, and "Purchase Frequency" refers more to how often orders are placed rather than the efficiency with which inventory is managed. Thus, turnover effectively encapsulates the concept of how frequently inventory needs to be reordered based on sales activity.