What Are the Main Reasons That an Organization Has Inventory

question 91

Essay

What are the main reasons that an organization has inventory?

Assess and compare the total cost of ownership between international and domestic suppliers.

Appreciate the strategic advantages of entering new markets through purchasing activities.

Know the entities involved in facilitating international buying and their roles.

Evaluate the effect of transportation, customs, and exchange rates in international sourcing decisions.

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Definitions:

Rationing Mechanism

A system used to allocate scarce goods and services using criteria other than price.

Surplus

An excess of supply over demand, resulting in an accumulation of unsold products or unused resources.

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy matches the amount that producers are willing to sell, resulting in a balanced market situation.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific period.