Consulting Case Interview Practice Questions

Answer: True. Carrying inventory is risky. It results in less cash liquidity and can also decrease in value (in some cases, it may also appreciate in value).

Key Takeaway: Better inventory management is a common solution to what ails many companies. It improves their risk file and frees up cash. However, reducing inventory is easier said than done. Two examples of techniques are to accelerate manufacturing times (reducing work-in-progress) and improve forecasting.