With Inventory management the major problem is maintaining the delicate balance between too little and too much. The goal is that it should be done in an effective and profitable manner $-$ managing costs while maximizing sales.

Too little $-$ poor service, stockouts, brand switching, and loss of market share.

Too much $-$ leads to higher costs because of higher$-$than$-$necessary inventory$-$carrying costs and the risk that it may become obsolete. There are six Traditional Reasons for Holding Inventory:

$1.$ Buffer against variations in supply and demand

$2.$ Better service for customers who wish to be served on demand

$3.$ Production efficiencies

$4.$ To provide a hedge against price increases by suppliers

$5.$ To promote purchasing and transportation discounts

$6.$ To protect the firm from such contingencies as strikes and shortages

Methodology

Consider a local grocery firm in Newfoundland and Labrador such as described below and identify which of the six Traditional Reasons for Holding Inventory issues is important In formulating the answer be sure to relate directly to your company scenario. A short

Deliverables:

$1.$ A description of the company chosen

$2.$ Identify which of the six Traditional Reasons for Holding Inventory that best applies to the company chosen; may be more than one but not all $6!$

$3.$ Explain the choice; make sure to mention profitability in the explanation.

Overview of Farm

A family owned and operated farm in St$.$ John$$s$,$ Newfoundland. Growing is our business!

Throughout our season we grow over different varieties of fruits and veggies right here on our farm. Since XXXX$,$ we have been providing o with fresh, tasty food through our market. We have a lot GROWing on for each season!

From beautiful flowers, to our strawberry upick, our freshly harvested veggies, lots of fall fun, to visiting some furry friends we know you'll find something to love on our farm.