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NEED TO HOLD INVENTORIES
Martin and miller identified three general motives for holding inventories
TRANSACTION MOTIVE: This refers to the need of maintaining inventory to facilitate smooth production and sales operations.
PRECAUTIONARY MOTIVE: Precautionary motive for holding inventory is to provide a safeguard when then actual level of activity is differ than anticipated. This inventory serves when there is a unpredictable changes in the demand and supply forces.
SPECULATIVE MOTIVE: This motive influences the decision to increase or decrease the levels of inventory to take the advantage of price fluctuations.
Martin and miller identified three general motives for holding inventories
TRANSACTION MOTIVE: This refers to the need of maintaining inventory to facilitate smooth production and sales operations.
PRECAUTIONARY MOTIVE: Precautionary motive for holding inventory is to provide a safeguard when then actual level of activity is differ than anticipated. This inventory serves when there is a unpredictable changes in the demand and supply forces.
SPECULATIVE MOTIVE: This motive influences the decision to increase or decrease the levels of inventory to take the advantage of price fluctuations.
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