Which statement best describes the relation between bulk purchasing and inventory management?

Which statement best describes the relation between bulk purchasing and inventory management?

• A. Bulk purchasing leads to higher per-unit costs
• B. Bulk purchasing eliminates the need for inventory control
• C. Economies of scale from bulk purchasing allow better pricing and inventory efficiency
• D. Bulk purchases complicate procurement planning

Answer: (C)

Bulk purchasing leverages economies of scale, so buying in larger quantities lowers the price per unit. That cost saving helps inventory management in a few ways: you can place fewer, larger orders, which reduces ordering costs and creates more predictable replenishment cycles. With lower unit costs and steadier supply, you can plan stock levels more accurately, improve inventory turnover, and manage working capital more efficiently. Of course, this benefit depends on having enough storage space and stable demand, since larger buys can raise carrying costs or risk obsolescence if demand shifts. But when these conditions are met, the overall effect is better pricing coupled with more efficient inventory control.

Bulk purchasing leverages economies of scale, so buying in larger quantities lowers the price per unit. That cost saving helps inventory management in a few ways: you can place fewer, larger orders, which reduces ordering costs and creates more predictable replenishment cycles. With lower unit costs and steadier supply, you can plan stock levels more accurately, improve inventory turnover, and manage working capital more efficiently. Of course, this benefit depends on having enough storage space and stable demand, since larger buys can raise carrying costs or risk obsolescence if demand shifts. But when these conditions are met, the overall effect is better pricing coupled with more efficient inventory control.