Which statement best defines anticipatory stock?

Which statement best defines anticipatory stock?

• A. Inventory held to meet unexpected demand spikes.
• B. Inventory kept on hand because of expected future demand or price increases.
• C. Inventory used to discard expired products.
• D. Inventory used for dividend distributions.

Answer: (B)

Anticipatory stock is inventory kept in preparation for known or forecasted future conditions, such as expected demand or price changes. The idea is to stock up now to meet a future need or to take advantage of anticipated lower costs before prices rise, helping to smooth operations and prevent shortages during when demand is higher or costs are higher. For example, if forecasts predict a surge in demand or a supplier plans a price increase, you’d increase stock ahead of time rather than waiting. This differs from safety stock, which is held specifically to guard against unpredictable spikes in demand; anticipatory stock is based on forecasted events, not random variability. The other options describe uses unrelated to planning for future demand or price shifts, such as discarding expired products or distributions of dividends.

Anticipatory stock is inventory kept in preparation for known or forecasted future conditions, such as expected demand or price changes. The idea is to stock up now to meet a future need or to take advantage of anticipated lower costs before prices rise, helping to smooth operations and prevent shortages during when demand is higher or costs are higher. For example, if forecasts predict a surge in demand or a supplier plans a price increase, you’d increase stock ahead of time rather than waiting. This differs from safety stock, which is held specifically to guard against unpredictable spikes in demand; anticipatory stock is based on forecasted events, not random variability. The other options describe uses unrelated to planning for future demand or price shifts, such as discarding expired products or distributions of dividends.