Promoting during a peak demand month may decrease overall profitability if

Question

Quizplus · Accepted Answer

If a significant fraction of the peak demand increase results from a forward buy, then promoting during the peak demand month may lead to customers stockpiling or buying more than they need, resulting in decreased demand in the following months. This can lead to excess inventory and decreased profitability. Therefore, promoting during a peak demand month may not be the best strategy if a significant fraction of the demand increase results from a forward buy.

Promoting During a Peak Demand Month May Decrease Overall Profitability