Which circumstance would cause average inventory holdings to decrease,other things held constant?
A)Fixed order costs double.
B)The purchase price of inventory items decreases by 50%.
C)The carrying price of an item decreases as a percentage of purchase price.
D)The sales forecast is revised downward by 10%.

Question

Quizplus · Accepted Answer

If the sales forecast is revised downward by 10%, it means that the company expects to sell less and therefore needs to hold less inventory on hand. This would result in a decrease in average inventory holdings.

Which Circumstance Would Cause Average Inventory Holdings to Decrease,other Things