Firms should hold the minimum amounts of inventories that will not jeopardise productions schedules or the satisfaction of customer expectations.

Question

Quizplus · Accepted Answer

Holding excessive inventories can tie up capital and increase storage costs, while holding insufficient inventories can lead to production delays and dissatisfied customers. Therefore, firms should aim to find the optimal level of inventory that balances these risks.

Firms Should Hold the Minimum Amounts of Inventories That Will