How does carrying inventories contribute to economies of scale?
A)Increases the interest on the expenses to produce the inventory
B)Inventory depreciates in value while waiting to be used or sold
C)Increases the storage facilities necessary
D)Increases competition with rivals for customers
E)Minimizes the chance of stock-out

Question

Quizplus · Accepted Answer

Carrying inventories helps to minimize the chances of stock-outs, which can lead to lost sales and dissatisfied customers. This means that a company can maintain a consistent level of supply to meet demand, which can contribute to economies of scale by allowing for more efficient production and distribution processes.

How Does Carrying Inventories Contribute to Economies of Scale