<blockquote>
  <p>"If a firm produces 1000 shirts (finished products), expecting to keep an inventory of 100 shirts at the end of the year." Here Why a firm keep an inventory of 100 shirts ?</p>
</blockquote>

<p><em>Expectation</em> is different than <em>preference</em>. A company might prefer to sell everything, yet be realistic enough to rule out the scenario of being able to sell its entire merchandise this year.</p>

<p>Other than expectations and sales forecast, retaining a portion of the inventory this year could make more sense in terms of fiscal planning. That will depend on the company's numbers, any subsidies or benefits for which it intends to qualify, the expenses it can deduct, and the particulars of a so-called <a href="https://en.wikipedia.org/wiki/Progressive_tax" rel="nofollow noreferrer">"progressive" tax</a> regime.</p>

<p>It could also be the case that the company anticipates an increase in the price of shirts at the end of the year. By setting a portion [of the inventory] aside, the company tries to ensure that it will be able to take advantage of the price increase.</p>

<blockquote>
  <p>who will going to buy it because of they are already old products compared to coming year there are new products produced?</p>
</blockquote>

<p>Shirts are not "perishable" goods. Generally speaking, they can be as useful in year <em>n+1</em> as in year <em>n</em>.</p>

<p>The text where you read that exercise or exercise might refer to something entirely different, though.</p>

CC BY-SA 4.0
2019-01-27T12:34:29.520Z
2019-01-27T12:34:29.520Z
Iñaki Viggers
<p>"If a firm produces 1000 shirts (finished products), expecting to keep an inventory of 100 shirts at the end of the year." Here 
Why a firm keep an inventory of 100 shirts ? 
What is the need of it? 
If the firm sold all 1000 shirts there is no need to keep inventory right? 
If we carry unsold of those 100 shirts to next year, who will going to buy it because of they are already old products compared to coming year there are new products produced?</p>

<macroeconomics><national-income>
Inventory based question
Nandy
# Inventory based question

(Asked by: username_0 on 2019-01-27)

"If a firm produces 1000 shirts (finished products), expecting to keep an inventory of 100 shirts at the end of the year." Here
Why a firm keep an inventory of 100 shirts ?
What is the need of it?
If the firm sold all 1000 shirts there is no need to keep inventory right?
If we carry unsold of those 100 shirts to next year, who will going to buy it because of they are already old products compared to coming year there are new products produced?

**Tags:** macroeconomics, national-income

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## 1 answers

### Answer by username_1 on 2019-01-27. Score: 2

> "If a firm produces 1000 shirts (finished products), expecting to keep an inventory of 100 shirts at the end of the year." Here Why a firm keep an inventory of 100 shirts ?

*Expectation* is different than *preference*. A company might prefer to sell everything, yet be realistic enough to rule out the scenario of being able to sell its entire merchandise this year.

Other than expectations and sales forecast, retaining a portion of the inventory this year could make more sense in terms of fiscal planning. That will depend on the company's numbers, any subsidies or benefits for which it intends to qualify, the expenses it can deduct, and the particulars of a so-called ["progressive" tax](https://en.wikipedia.org/wiki/Progressive_tax) regime.

It could also be the case that the company anticipates an increase in the price of shirts at the end of the year. By setting a portion [of the inventory] aside, the company tries to ensure that it will be able to take advantage of the price increase.

> who will going to buy it because of they are already old products compared to coming year there are new products produced?

Shirts are not "perishable" goods. Generally speaking, they can be as useful in year *n+1* as in year *n*.

The text where you read that exercise or exercise might refer to something entirely different, though.


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