Question

(a) Under what circumstances can inventory be used as a hedge against inflation? (b) And what is the purpose of inventory control? Write a brief report interpreting the results. Note: Agree or Disagree is not acceptable and zero credit will be awarded. Your response must be written in a minimum and maximum of 100 words, no formula or equation. Agree or disagree only will be zero for this discussion for this week!

Answer 1

(a) Under what circumstances can inventory be used as a hedge against inflation?

Many products have high inflation rates. ie. their prices tend to fluctuate more than other prices which would highly impact their production as well as sales. A company can use its inventory to hedge inflation by purchasing its inventory when the prices of the products is low. This would mean that the company can fight future inflation based on the inventory purchased at the low price in the past.

(b) what is the purpose of inventory control?

Inevtory control refers to the management of the inventory which secures an optimum balance of the inventory to ensure that the inevtory is neither too much that it can't be sold in the given time or too low that it would result in customer dissatisfaction due to unavailability of stock. This requires effect management of resources and forcatsing tools to ensure that the inventory is able to meet the demands of the consumers at any given point of time without incurring losses due to unosld inventory.