Question

Is it possible to achieve zero inventories? Why or why not?

Short answer

Inventory refers to a firm's ready-to-sell items, as well as the materials utilized to manufacture goods.

Step-by-step solution

Inventory

Inventory is the recording of goods, basic components, as well as raw materials that a corporation consumes as well as distributes. Inventory pertains to all of the things, commodities, commerce, as well as materials held by a company to resell in the marketplace for revenue

Is it possible to achieve zero inventories

The concept of zero inventories is connected to the concept of just-in-time production. The main purpose of this method is to decrease stock management expenses by achieving a zero inventory level. This strategy, however, is not practically practicable due to the following reasons:

1. Since the future is constantly uncertain, all businesses must have a certain quantity of stock on hand for emergencies.
2. Most businesses claim to have zero stocks; nevertheless, their stocks are transferred to their vendors, who arrive at the time of their production.
3. Stock will always be available due to lead time restrictions.

As a result, zero inventory may be defined as the concept. Firms can decrease their stocks to a certain minimal level, however, zero stocks are impossible to accomplish.