ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Lost sales
|
|
|
High storage space
|
|
|
Small reorder quantities
|
|
|
Purchase of more machinery
|
Detailed explanation-1: -Retaining a loyal customer base is easier than attracting a new one, so by driving away your best customers, carrying too little stock has the potential to slow your business’ growth, or even to shrink it. Frequently being unable to fulfill customer orders will also damage your reputation among potential customers.
Detailed explanation-2: -The most obvious consequence of stockouts is lost revenue. If a customer goes to place an order and the item is out of stock, you lose the profit of that sale. Shoppers may opt for cheaper products. Or even worse, you may lose a customer forever, which means less recurring sales in the future.
Detailed explanation-3: -A Lost Sale occurs when you have a customer demand for a part and you do not have the part in stock. The customer can’t wait for the part to be ordered or you can’t procure the part from a local source in a quick timely manner. The customer decides to go elsewhere to buy the part. You lost the sale.