Holding inventory at the raw materials level rather than as finished goods reduces the cost of carrying inventory but also results in longer delivery times.

Question

Quizplus · Accepted Answer

Holding inventory as raw materials can reduce costs since raw materials are generally cheaper to store than finished goods. However, it may lead to longer delivery times because additional time is needed to convert raw materials into finished products before they can be shipped to customers.

Holding Inventory at the Raw Materials Level Rather Than as Finished