A company resorts to discount blowouts to get rid of excess merchandise. Which of the following scenarios is most likely to have triggered this action?
A) decrease in inventory costs
B) ineffective tracking of the inventory
C) overestimating demand forecast accuracy
D) increase in the price of raw materials

Question

Quizplus · Accepted Answer

When a company overestimates demand forecast accuracy, it often results in excess inventory that needs to be cleared out. To do so, the company may resort to discount blowouts to quickly get rid of the excess merchandise. A decrease in inventory costs or an increase in the price of raw materials would not necessarily trigger this action, and ineffective tracking of the inventory may lead to excess inventory but does not necessarily result in discount blowouts.

A Company Resorts to Discount Blowouts to Get Rid of Excess