If sales fall permanently, the company will hold less inventory. See the correct answer for a complete explanation.
If the cost of holding inventory decreases, the company will be more likely to hold larger levels of inventory. This is because there is a lower cost and by having more inventory there is less risk of a stockout.
If the cost of running out of inventory decreases the company will hold less inventory because of the lower cost of not having inventory.
As the variability of sales decreases, the company will be able to hold lower levels of inventory because there is less chance of a large demand that the company needs to be prepared for.
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