Firms decrease inventory because there is a risk of interruptions due to unreliable productivity and quality.

Firms decrease inventory because there are price discounts or transportation discounts associated with ordering in larger quantities

Firms decrease inventory because the more inventory sitting for longer periods of time present more opportunities for damage, errors, rework, theft, and obsolescence

Firms decrease inventory because there is a risk of interruptions in the flow of components$/$materials from upstream suppliers

Firms decrease inventory because there is a risk of significant and unpredictable fluctuations in downstream demand