Problems related to Overstocking : High storage costs eg lighting, security, insurance, Large amount of space taken up that could be used for something else., Money tied up when it could be used more profitably., Unsold stock may deteriorate/out of date, Greater chance of theft by employees., If social factors change (Trends/fashion) the stock might be wasted, Problems related to Understocking : Unable to cope with unexpected demand., If deliveries are held up, organisation may run out of stock and may have to stop production., Organisations holding low stock may have to place frequent orders, thus increasing administration costs., Loss of customers if they don’t receive their order on time, Damage to reputation.,

Management of Operations - Stock Management

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