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This perishable goods question was a bit tricky because the point about potential stock outs is true if the stock levels are not checked, however, I didn’t know if this was relevant to the answer due to the question being about when the order is put in.
I don’t remember the exact wording to this question but does anybody know what I am talking about and know what the answer was?
What I do remember is that I thought you could end up ordering too much and the perishable goods may perish before needing to be used and there was another point that I thought was relevant.
I remember this MCQ had three options and the stock-out was not correct, only the other two were.
The other two were probably, not in exact words, only the main idea :
1. Goods is perishable so ordering too much may lead to damaged stock and write downs2. Investing too much on inventory when you didn’t need it might affect cash flow position
The stock-out was wrong because the problem posed in the question was having too much inventory, not having not enough inventory
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