ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Select the costs and risks of UNDERstocking:
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Reputation may suffer if order are not met
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Customer may be lost to competition
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Advertisement costs will increase
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Money will be tied up in stock
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Explanation:
Detailed explanation-1: -Anytime an item is not moving, you are paying for it to take up space. As those items sit, they depreciate, which means you are actively losing potential profits as an overstock drags on. Some items may even become obsolete. One of the biggest consequences with understock is customer dissatisfaction.
Detailed explanation-2: -Business cannot fulfil orders on time. Production may stop due to the lack of available materials. It will never be possible to meet unexpected large orders. The business will be viewed as unreliable and its reputation will be damaged.
There is 1 question to complete.