Question

​Chancellor's is a​ high-end men's clothing store that frequently resorts to discount blowouts to get rid of excess merchandise. Which of the following best explains the reason for these​ sales? A. Overestimating demand B. Ineffective tracking of the inventory C. An increase in the price of raw materials D. A decrease in inventory costs E. Increased competition in the local market

Answer 1

The Overestimating demand best explains the reason for these​ sales.

Option: A

Explanation:

If your company overestimates demand, more stock will end up than it requires. This may raise the cost of your labor and storage if employees decide to transfer this product to the next warehouse to make room for new inventories. If your company sells perishable items, you may incur yet another damage due to the decay of the product that is unsold.

Thus in such a case, you may also need to sell stock at a bargain which decreases the profit margins and profits of your business. Supply Chain Management (SCM) technology can help to improve the supply chain forecasting and measurement mechanism by synchronizing the supply and demand loop using actual-time information. As a consequence, there is less risk that the product will remain unfinished.