Surplus Inventory
Surplus inventory refers to excess stock or inventory that a company holds beyond what is needed for current operations. This can occur due to overproduction, changes in demand, or inefficient inventory management.
Having surplus inventory can be costly for a business as it ties up capital and storage space that could be used for more profitable purposes. It can also lead to obsolescence if the products are no longer in demand.
One way companies deal with surplus inventory is by offering discounts or promotions to clear out the excess stock. This can help generate revenue and free up space for new inventory.
Another option is to sell the surplus inventory to liquidation companies or wholesalers at a discounted price. While this may result in lower profit margins, it can help recoup some of the costs associated with holding onto excess stock.
Overall, managing surplus inventory is an important aspect of inventory management that can have a significant impact on a company’s bottom line.
Examples of Surplus Inventory:
- Example 1: A clothing retailer has excess winter coats at the end of the season due to unseasonably warm weather.
- Example 2: A technology company overestimates demand for a new product and ends up with excess inventory sitting in warehouses.
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