Paper 1 · November 2022 · inventory
An advantage to an enterprise of holding small volumes of inventory is that
Aproduction continues even when a supplier delivers late.
Bless cash is tied up and storage and insurance costs are lower.
Ccustomer orders can always be filled from stock on the day.
Dthe enterprise earns larger discounts on the goods that it buys.
Explanation
Goods sitting in a store earn nothing and still cost money to house, insure and guard, and they may spoil or become unfashionable, so a lean stock releases cash for other uses. The price of running lean is exactly what the other three options describe: less cover against late delivery and smaller bulk discounts.
Derived from ZIMSEC Business Enterprise Skills Paper 1, Nov 2022, Q1