Question

The following is TRUE about Inventory:________.A. Firms decrease inventory because there is a risk of significant and unpredictable fluctuations in downstream demand B. Firms decrease inventory because there are price discounts or transportation discounts associated with ordering in larger quantities C. Firms decrease inventory because the more we spend on inventory, the more we need to spend on other inventory-related expenditures D. Firms decrease inventory because there is a risk of interruptions in the flow of components/materials from upstream suppliers E. Firms decrease inventory because there is a risk of interruptions due to unreliable productivity and quality.

Answer 1

Answer:

The correct answer is option (c).

Explanation:

Solution

From the question sated above the answer is, Firms or organisation decrease inventory because the more we spend on inventory, the more we will need to spend on the other related inventory expenditures.

The reason is because if the inventory is kept full or complete, then the cost related or connected with the maintenance of the inventory increases or goes up and it is not beneficial for the company itself.