1309

Problem

Explain how consistent delivery performance gives the organizational buyer the opportunity to cut the level of inventory maintained.

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Step 1/3

All the companies want to keep fewer inventories because a lot of resources are wasted in managing inventories. These resources can be invested in some other assets and can provide the company with valuable return of investment.

Step 2/3

Higher inventories might also force a company to arrange warehouses and incur other inventory management expenses. Higher inventory might also result in making the end product obsolete due to introduction of latest version of a product.

Step 3/3

Therefore, in case a company is consistently providing products to other companies then it allows the company to make prediction about the future demands. This further allows the company to manage the inventory levels as per the demand predictions.

Hence, consistent delivery of the products give the buyer to cut on the maintenance of the inventory.