These include:(1) Seasonal Nature of Raw Material.

If certain raw material is available during a particular season, but its consumption continues throughout the year in the firm, the investment in such raw material shall naturally be heavier to store the stock in order to streamline the production throughout the year. Similarly, seasonal industries purchase raw material in the particular season. (2) length and Technical Nature of the Production Process. If production process is such that takes much time in its completion, the investment in inventories shall be larger such as ship-building industry. Moreover if production process is of technical nature, even then it requires heavy investment in inventories. (3) Style Factor in the End Product. The style factor of end product or nature of finished goods determines the size of investment in inventories. The durability and perishability of the finished product are such important factors. (4) Terms of Purchase. If supply of raw material is available on favourable terms i.e., long credit, conditions of supply, concession or rebate available etc., the management may have larger investment in inventories in order to avail of the opportunity of favourable terms. If on the other hand, raw material is available only on cash terms, the management will dare not to invest heavy amount in inventories. (5) supply Conditions. Certainty and regularity in supply of raw material are also important factors in determining the size of investment from the view point of operating continuity. Suppose, if the source of material is outside the country and a ban on imports is feared or supply may be disturbed due to weather, a great stock of inventory will be needed. (6) Time Factor. Time is also an important factor in determining the size of inventory and affects the inventory management in a number of ways-(i) bad time i.e., time lag between indenting and availability of raw material, (ii) time lag between purchase of raw materials and the commencement of process, (iii) time required in production process, and (iv) average time required for sale of product. These all exercise their impact on investment in inventories. (7) Price Level Variation. If a price rise is expected in the near future, the investment in raw material will be grater in a bid to keep the cost of product minimum. On the other hand, if price level is experted to go down, there will be a tendency to purchase the goods in the open market a an when it is needed. (8) Loan Facilities. Generally raw materials are purchased on credit. Moreover banks advance credit to the firms against their stock of inventories. If the cost of carrying stock and cost of availability of funds is cheaper than the interest payable to the bank, the investment in inventories will be higher. (9) Other Factors. Others factors like industry wide strike threats, proposed control of raw material, or revision of excise duty rates, price control of finished stock etc., also affect the investment decisions in inventories.