From the course: Inventory Management Foundations
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Reasons to hold inventory
From the course: Inventory Management Foundations
Reasons to hold inventory
- Keeping an extra supply of inventory is a good thing. Wait a minute, aren't we working hard to reduce our inventory? Yes, but there are valid reasons to carry additional inventory. Here are four good reasons to hold inventory. First and foremost, you might carry extra inventory to ensure you meet customer expectations. A safety stock of finished goods, for example, can make sure you feel your best customer's orders even when demand suddenly increases. Additional spare parts can help you meet emergency service needs. Scheduling extra call center employees during peak hours can provide excellent customer service after the sale. A second valid reason for holding inventory is to avoid disrupting operations in your company. A smooth flow of materials ensures equipment is running efficiently to meet production schedules. Holding additional materials and products also helps to prevent rush orders both within the factory and…
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