Question

A company which sources raw materials and components from overseas will hold extra inventory of these items due to a mismatch between the timing of customer demand and supply chain lead times. This type of inventory is A. cycle stock. B. transportation. C. hedging. D. smoothing.

Answer 1

Answer: Transportation Inventory

Explanation: Transportation or transit inventory is a type of inventory that accounts for goods a company has paid for but is yet to be delivered to their warehouse.

The company described in the question is involved in transit inventory and ensures to keep reserves of products they sell, in case their goods are not delivered before the time their customers need them.