What are the Risks of High Inventory Carrying Costs?
High inventory carrying costs can lead to several risks for businesses:
Reduced Profit Margins: Increased costs can reduce overall profitability. Cash Flow Issues: Tying up capital in inventory can lead to liquidity problems. Obsolescence: Excess inventory can become obsolete, leading to write-offs. Storage Constraints: Limited storage space can hinder the ability to manage additional inventory effectively.