An ARC accredited agent's actual order quantity is calculated by:

An ARC accredited agent's actual order quantity is calculated by:

• A. Subtracting the ARC accredited agency's current inventory from their maximum supply allowance.
• B. Subtracting the maximum supply allowance from current inventory.
• C. Adding current inventory to maximum supply.
• D. Multiplying inventory by allowance.

Answer: (A)

This question tests how to determine the actual order quantity by bringing the agent’s inventory up to the allowed maximum. The correct approach is to subtract the current inventory from the maximum supply allowance. This difference tells you exactly how many units to order so the total inventory reaches the permitted maximum. For example, if the maximum supply allowance is 100 units and the current inventory is 60, the actual order quantity would be 40 units. Why this is the right way: you want to reach, but not exceed, the maximum limit. Subtracting current from max provides this precise amount. If you subtract in the opposite order, you’d get a negative number, which isn’t a feasible order quantity. Adding the two figures would push you beyond the limit, and multiplying them doesn’t reflect how many units you should order to meet a cap.

This question tests how to determine the actual order quantity by bringing the agent’s inventory up to the allowed maximum. The correct approach is to subtract the current inventory from the maximum supply allowance. This difference tells you exactly how many units to order so the total inventory reaches the permitted maximum.

For example, if the maximum supply allowance is 100 units and the current inventory is 60, the actual order quantity would be 40 units.

Why this is the right way: you want to reach, but not exceed, the maximum limit. Subtracting current from max provides this precise amount. If you subtract in the opposite order, you’d get a negative number, which isn’t a feasible order quantity. Adding the two figures would push you beyond the limit, and multiplying them doesn’t reflect how many units you should order to meet a cap.