• 1 Marks

MI – Nov 2015 – L1 – SA – Q4 – Accounting for Cost Elements

Identifies a reason why an organization may not hold inventory.

An organisation may NOT hold inventory in order to:
A. Meet regular demands
B. Even out seasonal variation in demand
C. Act as buffer when higher demand is expected
D. Meet technical requirements of a production system
E. Take advantage of bulk purchase discounts

D. Meet technical requirements of a production system

Explanation:
Organizations typically hold inventory for reasons such as meeting regular demand, handling seasonal variations, acting as a buffer for unexpected demand, or taking advantage of bulk purchase discounts. Holding inventory solely to meet technical requirements of a production system is not a standard reason for inventory management.

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