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Why is an increase in demand for products not a possible reason why a company’s inventory holding period increases from one year to the next
Hi,
If there is an increase in demand then the goods are being sold more quickly and so we are not holding the inventory for as long as previously, and therefore this decreases the inventory holding period.
Thanks
But if there is an increase in demand, then more inventory is being held to sell in the next year and also to avoid shortage, which increases the inventory holding period. So an increase in demand could be a reason why a company’s inventory holding period increases from one year to the next. So why is the answer that increase in demand could be a reason why a company’s inventory holding period increases from one year to the next incorrect
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