You Are the New Controller at Ralston Industries and You

question 56

Essay

You are the new controller at Ralston Industries and you have noticed that the company seems to carry a lot of inventory, both in direct materials and in finished goods. At a recent management meeting, you raised this observation. The managers agreed with your observation but stated that it was company policy to carry large inventories.
Required:
What reasons might these managers offer in support of carrying large inventories?

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Definitions:

Meta-analysis

A statistical analysis that combines the results of multiple scientific studies to identify patterns, inconsistencies, or overall effects.

Katz

Refers to Robert L. Katz's theory that identifies three essential skills for effective management: technical, human, and conceptual skills.

Crystallized Cognitive Ability

The ability to use learned knowledge and experience efficiently, often increasing with age and experience.

Career Experiences

The series of jobs and positions a person holds over their working life, including the skills, knowledge, and experiences gained.