Disadvantages of Holding Too Much Inventory on Hand
Inventory Management An essential aspect of managing any of business that deals in selling of physical goods is determining how many goods to produce and how large of a stock of goods to keep on hand for sale.
Products that are available sale are referred to as inventory or stock.
Keeping a large amount of inventory on hand can be advantageous in that it reduces the chance of running out of a product, but a large inventory can also have several notable disadvantages.
- Storage Costs
Holding a large volume of item on your hand mean you need a large amount of space to store it.High level of inventory can lead to higher number of cost to manage them.
It Require Workers to categorize and organization of items.
- Deterioration and Obsolescence
one businesses sell goods that tend to deteriorate or perish over time, such as food products. Keeping a large amount of perishable inventory on hand risks the possibility that you will be unable to sell some of the inventory in time before it goes bad, which can force you to throw away product. Similarly, certain types of products, such as computers and other electronic devices tend to become obsolete quickly. Keeping a large inventory of such products is risky because consumers might not be willing to buy old versions of products at a price that is profitable when new or updated versions become available.
- Shifts in Demand
keeping a large amount inventory on hand is that certain goods might not sell due to shifts in market demands.
- Considerations
While having high level of inventory can be disadvantage, Carrying too few good on hand can also be harmful to you
Hold On
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