Question

Which method is not a way to discourage producing for​ inventory?

a. include nonfinancial measures when evaluating performance

b. focus on careful budgeting and inventory planning

c. incorporate a carrying charge for inventory

d. evaluate performance on a quarterly basis only?

Answer 1

The incorrect option is (D) evaluate performance on a quarterly basis only.

Step-by-step explanation:

This option has nothing to do with discouraging production inventory. Option (A) makes sense because by including non-financial measures, and instead adding for example stock-in-hand as a method to measure performance, it would lead to a decrease of raw materials overstock. Option (B) would also lead to a decrease in production inventory since it ensures that inventory management initiatives are employed. (C) would also discourage producing for inventory because it creates a punishment for having too many slow moving inventory.