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Which one of the following actions will tend to increase the inventory period? Discontinuing all slow-selling...

Which one of the following actions will tend to increase the inventory period?
Discontinuing all slow-selling merchandise.
Selling obsolete inventory below cost just to get rid of it.
Buying raw materials only as needed for the manufacturing process.
Producing goods on demand versus for inventory.
Increasing inventory selection to attract more customers.
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Answer #1

Answer - option E : Increasing inventory selection to attract more customers.

Inventory period reflects how long it takes a company to sell its current inventory. It is a usage ratio that calculates number of days, over a given period of time, goods are held in inventory before they are sold.

Slow selling merchandise increase the Inventory period so discontinue this type of stock reduces the inventory period. Selling obsolete stock below stock also reduces Inventory period. Purchase of raw materials and goods only as per requirement also reduces Inventory period. So, increasing inventory selection to attract more customers will tend to increase Inventory period.

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