How does an organization decide whether or not to hold inventory?

Business & Finance
Tutor: None Selected Time limit: 1 Day

How does an organization decide whether or not to hold inventory? Why are these reasons important?

Nov 8th, 2015

Thank you for the opportunity to help you with your question!

According to MSG, the reasons for holding inventory, even regarding inventory in the form of raw materials to make a product are to "meet variation in production, cater to cyclical and seasonal demand, economies of sale and procurement, take advantage of price increase and quality discounts, reduce transit costs and transit times, and the fact that long lead and high demand items need to be high in inventory" ("Need for Inventory Management - Why do Companies hold inventories?").  These reasons are important, because by acknowledging these reasons, the company producing the product out into the public can monitor the amount of profit made more accurately and not worry about loosing profit because of low demand so much.


Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 8th, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Nov 8th, 2015
...
Nov 8th, 2015
Dec 10th, 2016
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer