In the last year, there has been a shortage of silicone used for tubing, and PlastiPharm$$s major suppliers have increased their lead times for delivery of tubing. As its need for the silicone tubing increased, the company increased its inventory. But isn$$t excess inventory bad? Why would the company want to build up inventory?

Increasing its silicone tubing supply allows the company to benefit from cost savings for buying in higher quantities.

Having a plentiful supply of silicone tubing allows the company to be flexible to supplier demands.

Holding safety stock of silicone tubing allows the company to meet customer demand and keep its customers happy.

Building up a supply of silicone tubing does not hurt the company because it just sits in the warehouse, ready to be used when orders are placed.