It is better to maintain too little rather than too much inventory because there are significant storage costs for excess inventory,but few if any costs associated with understocking inventory.

Question

Quizplus · Accepted Answer

It is actually better to maintain enough inventory to meet demand and avoid stockouts, which can result in lost sales, dissatisfied customers, and potential damage to a company's reputation. While excess inventory can lead to storage costs and waste, it is often less costly than lost sales or lost customers. Therefore, the optimal inventory level is one that balances the costs of carrying inventory against the costs of not carrying enough inventory.

It Is Better to Maintain Too Little Rather Than Too