inventory management

Question 1

what is understocking

Answer 1

when an organisation holds an insufficient amount of inventory to be able to carry out production/fulfil orders

Question 2

what is overstocking

Answer 2

when an organisation holds more inventory that they can use/sell

Question 3

explain - the organisation may be unable to continue with production…

Answer 3

this means that customer orders wont be fulfilled

Question 4

explain - becomes harder to cope with unexpected changes in demand…

Answer 4

which means that customers may go elsewhere to purchase the product

Question 5

explain - more storage space is required to hold the inventory…

Answer 5

This means that the business has to spend more money in order to find places to hold their stock

Question 6

explain - goods may deteriorate before they are sold…

Answer 6

this means that the products will go to waste and the business will lose lots of profit.