Inventory Management

Background:

There are many reasons to hold inventory, such as:

1. Meet unexpected demand

2. Smooth seasonal or cyclical demand

3. Meet variations in customer demand

4. Take advantage of price discounts

5. Hedge against price increases

6. Quantity discounts

Questions for Thought:

1. Why would firms want to hold inventory?

2. How can a manager balance the costs of having too much inventory versus having not enough inventory in a planning period?

3. What could the managers do in the video clip to alleviate this type of situation?