1Consider a consulting firm that completes large software projects that often take two or more years to complete. What is the nature of inventory for such a firm? How should it value this inventory?
2A restaurant converts inputs into substantially different outputs, a key characteristic of a manufacturing firm. Yet, most would classify a restaurant as a service firm. How would you classify a restaurant? Why?
3Consider a firm such as U-Haul that supplies trucks that we could rent to move goods. (Ignore other aspects of U-Haul’s operations.) To meet demand, which is usually seasonal and focused on a few weeks each year, U-Haul keeps a large supply of trucks. Would you classify this firm as a service firm or as a merchandising firm? What conclusions do you draw about the distinctions between service and merchandising firms?
4List three reasons why a merchandising firm holds inventory.