Question

Negative inventory investment occurs when companies _____ their inventories _____.
A. add to; by increasing production
B. reduce; by decreasing production
C. add to; because sales fall
D. reduce; because sales increase.

Answer 1

Answer:

The answer is  D. reduce; because sales increase

Explanation:

Negative unplanned inventory is when the business doesn't have sufficient inventory to supply its customers. If customers buy more than expected, inventories unexpectedly decline and unintended inventory investment turns out to have been negative.