Which of the following would cause average inventory holdings to decrease,other things held constant?
A) Fixed order costs double.
B) The purchase price of inventory items decreases by 50 percent.
C) The carrying cost of an item decreases (as a percent of purchase price).
D) The sales forecast is revised downward by 10 percent.
E) None of the above (all would cause average inventory to increase).

Question

Quizplus · Accepted Answer

If the sales forecast is revised downward by 10 percent, the expected demand for inventory decreases. As a result, the company would need to order and hold less inventory, causing the average inventory holdings to decrease.

Which of the Following Would Cause Average Inventory Holdings to Decrease,other