What is Inventory Investment?

Question

Define the Inventory Investment? Or, What are the Significances of Inventory Investment?

Answer 1

At a point of time produces hold the the stock of finished Goods, semi finished goods and raw material this is called Inventory Stock. This stock keeps varying over time. Changes in inventory stock during the year is called Inventory investment of the of the producers.

Significance of Inventory Investment:

Inventory investment family consists of investment in terms of the stock of raw material and finished goods

(i) It ensures uninterrupted supply of inputs in the process of production.

(ii) With enough stock of raw material the producers can avoid their day-to-day purchases from the market. Accordingly, uncertainties of the market (relating to price and availability of the raw material) are avoided.