Which of the following would cause average inventory holdings to decrease, other things held constant?
A) The purchase price of inventory items decreases by 50 percent.
B) The carrying price of an item decreases (as a percent of purchase price).
C) The sales forecast is revised downward by 10 percent.
D) Interest rates fall.
E) Fixed order costs double.

Question

Quizplus · Accepted Answer

If the sales forecast is revised downward by 10 percent, it means that the company anticipates selling less inventory, which would lead to a decrease in average inventory holdings.

Which of the Following Would Cause Average Inventory Holdings to Decrease