ALevel商务例题解析（1）

Explain the costs and benefits to a business of a decision to hold low levels of inventory.  (5)

解析

Answers could include:

Costs such as:

Insufficient stock to meet demands – lost sales

Lack of raw materials leads to idle production resources

Unable to respond to exceptional/new orders quickly

If not buying large quantity of inventory, miss out on bulk buying discounts (JIT).

Benefits:

Opportunity cost of capital invested in inventory is reduced

Reduced storage costs

Reduced risk of wastage/obsolescence

Easier to organise and retrieve inventory.

Very much depends on the type of business activity involved and whether demand is normal or exceptional. It is a trade-off between benefits and risk of incurring costs.

知识点：

Inventory management

下面我们为大家准备了一道同类型的题目，请大家一起来试试解答。

Briefly explain two reasons why a business might decide to hold a high level of inventory.

答案就在：linstitute10