The possible reasons for carrying inventories are: uncertainty about the size of future demands; uncertainty about the duration of lead time for deliveries; provision for greater assurance of continuing production, using work-in-process inventories as a hedge against the failure of some of the machines feeding other machines; and speculation on future prices of commodities. Some of the other important benefits of carrying inventories are: reduction of ordering costs and production setup costs (these costs are less frequently incurred as the size of the orders are made larger which in turn creates higher inventories); price discounts for ordering large quantities; shipping economies; and maintenance of stable production rates and work-force levels which otherwise could fluctuate excessively due to variations in seasonal demand.