13 Identify and explain two advantages to QAC of having a high level of inventory. [6]
Posted: Wed Feb 18, 2026 3:33 pm
QAC uses batch production to make 70 different cleaning products including soap and polish. To meet increased demand for two of its products, X and Y, QAC could invest $10m in flow production using new technology. The Finance Director is worried about QAC’s cash flow position as shown in the Table. He thinks it is important to have a high level of inventory but he also wants to improve the cash flow position.
13 Identify and explain two advantages to QAC of having a high level of inventory. [6]
Possible KN Points:
• Ability to make orders straightaway
• Benefit from economies of scale / bulk buy
• Production does not stop
• Avoid supply problems
• Able to increase scale of production
13 Identify and explain two advantages to QAC of having a high level of inventory. [6]
Possible KN Points:
• Ability to make orders straightaway
• Benefit from economies of scale / bulk buy
• Production does not stop
• Avoid supply problems
• Able to increase scale of production