Question

All of the following are reasons for holding inventory EXCEPT: a. Inventories enable specialization in manufacturing. b. Inventories eliminate the variation in supply and demand. c. Inventories enable the firm to achieve economies of scale. d. Inventories provide protection from uncertainties in demand in the order cycle. e. Inventories act as a buffer between critical interfaces within the channel of distribution.

Answer 1

Answer:

The correct answer is B

Explanation:

Holding inventory is the term which is defined as the costs which is linked with storing or keeping the inventory that remains unsold with the seller. These costs are one of the vital component of the aggregate inventory costs, along with the shortage costs and the ordering costs.

The reason for holding the inventory could be require protection from uncertainties, enable the firm in accomplishing the economies of scale, act as buffer among the channel of distribution and critical interfaces and enable the specialization in production.