over/ under stocking

• Overstocking allows a business to meet any unexpected orders and provides a buffer to prevent production disruptions in case of supply chain issues.
• Overstocking ties up capital that could be invested in other areas of the business.
• There is a risk of inventory becoming outdated, obsolete, or spoiled, resulting in losses for the business.
• High inventory levels can lead to increased storage costs, including overheads and security expenses.
• Higher inventory storage expenses drives up the cost of production, making the company’s product less profitable.
• Understocking reduces costs associated with storage, maintenance and security of inventory.
• Understocking reduces the risk of inventory becoming obsolete or spoiled.