Which one of the following situations is an example of a reason to hold/increase inventory?
A) Great Greetings builds up their inventory of red, envelope-weight paper anticipating the Valentines Day spike in orders.
B) Barry's Best Bikes stocks up on tires of every size because Barry is worried that his warehouse employees are stealing inventory.
C) ACME widget is holding inventory, even though the inventory is probably obsolete. ACME is holding the inventory to avoid the expense of writing it off.
D) All of these are examples of legitimate reasons for holding inventory.

Question

Quizplus · Accepted Answer

Building up inventory in anticipation of a known increase in demand, such as for Valentine's Day, is a legitimate reason to hold or increase inventory.

Which One of the Following Situations Is an Example of a Reason