Need for Holding Stock

Meeting Unexpected Demands

Business must be ready to meet the requirements of the consumers for goods and services when they need them. Thus, businesses usually stock up their inventories to meet these unexpected demands. Consumer demands may result in overcrowding of inventories because it is not known when the consumers would flock to buy the items.

Smoothing of Seasonal Demands

With the changing seasons and comings and goings of major events, most businesses have inventories at hand to smoothen the seasonal demands.

Benefit from Price Discounts

When a business purchases goods in bulk from manufacturers or suppliers, they usually get price discounts if they buy in bigger bulks. Manufacturers and suppliers give these discounts to attract and maintain regular buyers. Taking advantage of price discounts is helpful at times but one must always remember not to overstock the inventory because inefficient buying may cause failure of the business.

Hedging against Price Rise

Businesses usually hold inventory to avoid from the ever fluctuating market price of inventories. Thus, by having efficient and good inventory system, businesses can control their inventory cost.

Getting Quality Discounts

When businesses have inventory in store, they can get quality discounts because they know which goods and services to buy from the suppliers and manufacturers. It helps to learn where to get better deals than no deal at all.