MANAGEMENT

Detailed explanation-1: -The effects of too little inventory This happens when you cannot immediately fulfill an order because of a stock-out of the ordered item. Not keeping track of inventory levels can lead to stock out of popular items during a sudden surge in demand. This can happen due to peak season or other external factors.

Detailed explanation-2: -An inventory cost refers to all the costs associated with holding and the management of inventory. The costs include all expenses related to ordering, warehousing, protecting, and deteriorating costs.

Detailed explanation-3: -The cost of inventory includes the cost of purchased merchandise, less discounts that are taken, plus any duties and transportation costs paid by the purchaser.

Detailed explanation-4: -This cost ensures that you do not run into grave losses by holding inventory over a long period of time. Always the carrying cost should only be in limits of 20% – 30% of your total inventory value.