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

A revision of sales forecast downward would result in a lower demand for inventory, which results in lower inventory holdings.

Which of the Following Would Cause Average Inventory Holdings to Decrease