The higher inventory levels were also taking up more space. Fred Hollis had submit-ted a requisition to the finance director to pay for more storage racking. The extra racks were necessary because existing ones were full, and parts stored on the floor were suf-fering occasional damage in an increasingly cramped factory. Some parts were recently returned by a customer, who felt that damaged packaging indicated damaged prod-ucts. Naturally, Fred was concerned when his request for more storage space was turned down owing to spending reductions imposed in response to price cuts demanded by customers