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Discuss Three Reasons Why Producers Might Hold Inventories That Exceed

question 71

Essay

Discuss three reasons why producers might hold inventories that exceed the amount needed to satisfy current demand. Discuss three drawbacks to holding large inventories? Explain.


Definitions:

General Journal Entries

Records of financial transactions in chronological order as part of the double-entry bookkeeping system.

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product, taking into account the effects of compounding.

Bank Loan

Money lent to an individual or business by a bank, typically requiring repayment with interest.

Interest Charged

The cost incurred for borrowing money, typically expressed as an annual percentage rate of the principal.

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