Facing reduced inventory, how would a firm like John Deere satisfy an increased demand for tractors if they have already drawn down inventories?
A) by increasing tractor inventories
B) by increasing the production of tractors
C) by increasing the price for tractors
D) by waiting for demand to decrease
E) They will not be able to, and will lose sales.

Question

Quizplus · Accepted Answer

If John Deere has already drawn down inventories, they can increase the production of tractors in order to satisfy an increased demand. This would require them to either increase their workforce, invest in better equipment, or both. Increasing tractor inventories may not be feasible if the firm is already facing reduced inventory, and increasing prices may not be ideal as it may deter customers and lead to price competition from competitors. Waiting for demand to decrease may not be a viable option either as this could result in lost sales and a decrease in market share.

Facing Reduced Inventory, How Would a Firm Like John Deere