Why Are Inventory Holding Costs Important for Entrepreneurs?
Understanding and managing inventory holding costs is vital for several reasons:
1. Cash Flow Management: High inventory levels tie up capital that could be used for other operational needs or investments. 2. Pricing Strategy: These costs can influence the pricing of products, affecting competitiveness and profitability. 3. Risk Mitigation: Effective inventory management can reduce risks associated with market fluctuations and demand variability.