Which type of contract requires no inventories?

The correct answer is the close loop contract. This type of contract is designed to eliminate the need for inventories as it focuses on a continuous delivery process that ensures that materials and components are supplied just in time for use. In a close loop contract, the supplier not only provides the necessary resources but also manages the entire process of supply and demand, thereby minimizing the need for storing excess inventory. This arrangement typically leads to cost savings and improved efficiency, while also allowing for more predictable supply chain management.

In contrast, the other types of contracts mentioned may involve elements of inventory management. A time and material contract typically involves billing clients based on the time spent and materials used, which can often include holding and managing inventory. A pool contract often involves shared resources among different users, where inventory management is a consideration. A repair agreement deals with the servicing or repairing of existing materials or products, which may also imply that there is inventory involved to replace or fix such items. Therefore, the close loop contract stands out as the only option designed specifically to operate effectively without the necessity of maintaining inventories.