Giant Motor Car Co. is in the business of automobile manufacturing and parts assembly. It uses a Just-In-Time inventory system, which greatly reduces inventory costs. The only difficulty, however, is that it leaves Giant somewhat vulnerable to supply stoppages. Giant has only 48 hours of raw materials inventory at any given time.

Question

Quizplus · Accepted Answer

A) Giant has an insurable interest in maintaining inventory supply because disruptions can lead to significant financial losses. B) Insurance against a strike at a parts supplier's plant is feasible because it directly affects Giant's operations. C) Obtaining life insurance for key employees, such as the inventory scheduler, is a common practice to mitigate the risk associated with the potential loss of crucial personnel.