The goal of managing working capital, such as inventory, should be to minimize the:

Question

Quizplus · Accepted Answer

Managing working capital involves balancing the costs of carrying inventory with the costs of shortage or stockouts. The goal should be to minimize the overall costs of both carrying and shortage costs. This allows a company to maintain sufficient inventory levels to meet demand while minimizing the costs associated with excess inventory or stockouts. Minimizing the costs of carrying inventory alone (option A) may lead to stockouts or shortages, while minimizing spoilage or pilferage (option D) is important but not the primary goal of managing working capital. The opportunity cost of capital (option B) is important, but not directly related to managing working capital.

The Goal of Managing Working Capital, Such as Inventory, Should