A firm that had no costs other than inventory costs will always aim to produce in a period the volume of goods necessary to make its stock of inventories at the end of the period equal to

Question

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A firm that has no costs other than inventory costs would aim to produce at the optimal level in order to maximize profits. The optimal level of production is the point where marginal revenue equals marginal cost. This would ensure that inventory levels are sufficient to meet demand while also minimizing the costs associated with holding excess inventory. Therefore, the firm would not aim to produce twice its sales or zero as these would not be optimal production levels. The stock at the beginning of the period may not necessarily be the optimal inventory level for the end of the period, as demand patterns may change over time.

A Firm That Had No Costs Other Than Inventory Costs