Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to
A)exploit economies of scale and raise cost.
B)exploit economies of scale and lower cost.
C)exploit customers and lower cost.
D)exploit customers and raise cost.

Question

Quizplus · Accepted Answer

When producing or purchasing in large lots, economies of scale can be exploited, resulting in lower costs per unit. However, this can also create cycle inventory because these large lots often exceed current demand, leading to excess inventory that must be stored until needed, increasing costs.

Cycle Inventory Exists Because Producing or Purchasing in Large Lots