The processes a business uses to manage their inventory levels and the issues associated with overstocking and understocking are important factors in the survival and success of that business.
Businesses need to be aware of the disadvantages of having too much inventory.
Having too much inventory is better than having no inventory, as this would prevent any production. Overstocking has the benefit that it allows a business to meet any unexpected orders. But as a rule it makes financial sense for businesses to keep down the amount of stock they hold.
Having too little inventory is obviously a potential disaster for any business. Customers expect their orders to be made and delivered as agreed.