Why do companies try to keep inventory low?
A) It keeps production stable.
B) Money that is not tied up with inventory can be used for other purposes.
C) The lower the inventory, the more flexibility the company has.
D) It keeps the employment in check.
E) It keeps the raw materials market balanced.

Question

Quizplus · Accepted Answer

Companies try to keep inventory low because money that is not tied up with inventory can be used for other purposes such as investing in new projects, marketing, research and development, or paying off debts. This helps the company to maintain financial flexibility and reduce the risk of overstocking, which can lead to wasted resources and potential losses.

Why Do Companies Try to Keep Inventory Low