Question

Which of the following inventory types provides ready supply of products on customer demand and enables long, efficient production runs? A) Raw materials inventory B) Work-in-process inventory C) Procurements inventory D) Finished goods inventory E) In-transit inventory

Answer 1

The inventory type that ensures a ready supply of products for customers and supports efficient production is Finished Goods Inventory.

Step-by-step explanation:

The type of inventory that provides a ready supply of products on customer demand and enables long, efficient production runs is D) Finished goods inventory. This category of inventory consists of products that have completed the production process but have not yet been sold to consumers. Having a stock of finished goods ensures that there is minimal delay in fulfilling customer orders, hence assisting businesses to meet demand promptly.

Finished goods inventory is maintained to buffer against variability in sales and to ensure the continuous supply of products to the market. It is crucial for businesses that seek to optimize their production processes and avoid frequent production cycle changes, which can be costly and inefficient. A well-managed finished goods inventory can also prevent potential stockouts and lost sales.