Managing Stockouts & Overstock — Assessment

1. What is the hidden cost of a stockout?

Customers walking to a competitor and not returning Nothing Higher taxes Extra storage fees

2. Why is overstock dangerous?

It speeds up sales It has no downside It is frozen cash plus storage and obsolescence risk It lowers taxes

3. Which report flags building overstock?

Zero-stock report Payroll report Tax report Days-of-stock and slow-mover reports

4. What happens if you over-correct a stockout?

You can create overstock and frozen cash Taxes rise Nothing changes Sales stop

5. What is the goal of balancing stock?

The healthy middle that serves demand without freezing cash Zero stock at all times Random levels Maximum possible stock

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