Which of the Following Is a Function of Inventory

question 77

Multiple Choice

Which of the following is a function of inventory?

• A) to decouple various parts of the production process
• B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand
• C) to take advantage of quantity discounts
• D) to hedge against inflation
• E) All of these are functions of inventory.

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Definitions:

Substitutes

Products or services that can be used in place of each other.

Substitutes

Products or services that can be used in place of one another, where an increase in the price of one leads to an increased demand for the other.

Complements

Goods or services that are used together, where an increase in the consumption of one leads to an increase in the consumption of the other.

Law of Supply

The principle that, other things equal, an increase in the price of a good leads to an increase in the quantity supplied, and vice versa.