What are the problems associated with overstocking?
Understand the Problem
The text discusses the problems associated with overstocking, particularly focusing on increased storage costs and the risk of product expiration. It highlights how excess inventory can lead to financial losses due to storage fees and potential write-offs of products that become out of date.
Answer
Increased storage costs, tied-up capital, and risk of obsolescence.
Problems of overstocking include increased storage costs, tied-up capital, and high risk of goods becoming obsolete.
Answer for screen readers
Problems of overstocking include increased storage costs, tied-up capital, and high risk of goods becoming obsolete.
More Information
Overstocking ties up capital that could be used elsewhere and increases the risk that older products won't sell due to changing market demands or product expiration.
Tips
A common mistake is failing to account for changing demand when planning inventory levels.
Sources
- Inventory Overstocking: Causes, Effects and How to Tackle It - uphance.com
- What Is Overstocking? 7 Causes and Effects (2024) - Shopify - shopify.com
- Major Overstocking Problems & How to Avoid Them - EngageBay - engagebay.com
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