Question

Inventory is important in the supply chain for many different reasons. Why would you invest the​ company's money for inventory as opposed to some other​ asset?

A. to provide a hedge against inflation.
B. to tightly synchronize production and distribution processes.
C. to ensure that item cost is maximized.
D. to tightly synchronize a​ firm's production with its​ customers' demand.

Answer 1

All the answers are right

Step-by-step explanation:

A.To provide a hedge against inflation. : in an inflationary economy, a company can invest in inventory in order to be prepared for the higher prices of raw materials to come. So they can maintain the company´s profit.

B. To tightly synchronize production and distribution processes: inventory of final products can help to minimize the effects of unexpected production problems.

C. To ensure that item cost is maximized: A company can buy a bulk of raw material since the cost of a large number of units is lower. So the final product's cost will be maximized.

D. to tightly synchronize a​ firm's production with its​ customers' demand: for example in a seasonal demand, There are certain months when the demand exceeds the production capacity. In theis case, in the lower season months, the company will be increasing the inventory in order to meet the demand when the high season comes.