Answer to Question #263806 in Management for Yours

Question

What kind of scenario might occur when an organization is out of stock of a needed product?​​​​​​​​​​    (8)     

Answer 1

When a customer encounters an out-of-stock situation, both the manufacturer and the merchant suffer a direct loss of a prospective sale since the buyer either purchase the item from another store or does not purchase it at all. The provision of "rain checks," unanticipated restocking, or the search for goods in the backroom all result in increased operating expenses. When a company is out of stock of a product that a customer requires, the following events may occur: the buyer may decide to wait until the product is available. The goods are returned by the customer. It is possible that the seller may lose the existing income. Create a separate business strategy for each manufacturing sector you want to target. Raw materials, work-in-process or subassembly, and final products are the categories to which objects should be assigned. Sort things into groups based on whether they are in stock or not. Minimum order quantities by component should be calculated in order to minimize inventory and transaction costs.