Why Hold Inventories .For economies of scale-It may be economical to produce a relatively large number of items in each production run and store them for future use Coping with Uncertainties Uncertainty in demand; VUncertainty in lead time Uncertainty in supply .For speculation- Purchase large quantities at current low prices and store them for future use. Cope with considerable fluctuation in price of costly commodities required in large quantities; Cope with labor strike;Why Hold Inventories •For economies of scale-It may be economical to produce a relatively large number of items in each production run and store them for future use. •Coping with Uncertainties Uncertainty in demand; Uncertainty in lead time Uncertainty in supply •For speculation- Purchase large quantities at current low prices and store them for future use. Cope with considerable fluctuation in price of costly commodities required in large quantities; Cope with labor strike;