Which of the following is NOT a benefit of holding inventory?
A) minimizes the risk that the firm will not be able to obtain an input it needs for production
B) seasonality of demand, meaning that customer purchases often do not match the most efficient production cycle, leading to a buildup of inventory in off-peak periods
C) minimizes order cost from placing multiple orders throughout the year
D) minimizes risks involved in spoilage and obsolescence

Question

Quizplus · Accepted Answer

Option D is not a benefit of holding inventory; rather, it represents a risk or disadvantage associated with holding inventory. Inventory holding can lead to spoilage and obsolescence, especially for perishable goods or products with a limited lifecycle, which is a cost to the firm, not a benefit.

Which of the Following Is NOT a Benefit of Holding