Acceptable Quality Level

Stock that is accumulated in advance of expected peak demand periods, seasonal sales, or known future events to ensure adequate supply and meet customer needs.

A method of inventory valuation where both variable and a portion of fixed costs are assigned to each unit of production. Fixed costs are typically allocated based on labor hours, machine hours, or material costs.

Activity-Based Costing – A costing method that assigns costs to products based on the activities required to produce them, providing a more accurate reflection of the costs incurred.

Demand that falls outside the limits established by management policy, often due to new customers or changing needs of existing customers.