Companies that hold large amounts of inventory because they are concerned with increased paperwork and handling expenses from procuring too often are trying to:
A) protect against stockouts and lost sales.
B) reduce their ordering costs.
C) create smoother production schedules.
D) outsource their paperwork related to ordering goods.

Question

Companies that hold large amounts of inventory because they are concerned with increased paperwork and handling expenses from procuring too often are trying to:
A) protect against stock­outs and lost sales.
B) reduce their ordering costs.
C) create smoother production schedules.
D) outsource their paperwork related to ordering goods.

Quizplus · Accepted Answer

By holding large amounts of inventory, companies are trying to reduce their ordering costs. They may believe that the paperwork and handling expenses of procuring too often outweigh the benefits of having only the necessary amount of inventory on hand. This is not necessarily directly related to protecting against stock-outs, creating smoother production schedules, or outsourcing paperwork.

Companies That Hold Large Amounts of Inventory Because They Are