In the paint industry, various raw materials are mixed in different proportions with petroleum from manufacturing different kinds of paints. One specific raw material is not readily and regularly available to the paint manufacturing companies. Bonler Paints Company is also facing this problem and because of this there is a time lag between placing the order and the actual receipt of the material. But, once it receives the raw materials, it takes less time in converting it into finished goods. Identify the factor affecting the working capital requirements of this industry.

The factor affecting the working capital requirements of this industry is the availability of raw materials. The unavailability of a specific raw material leads to a lag in the production process, impacting the company's ability to meet production schedules and fulfill orders. This necessitates holding larger inventories of raw materials to buffer against supply disruptions, thus increasing working capital needs. While the efficiency of converting raw materials into finished goods is a relevant operational factor, the primary driver of increased working capital in this scenario is the unreliable supply of a key raw material.