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It becomes waste of promotion and marketing costs. It leads to potential delays and stoppages within the manufacturing process. Inventory is managed by the use of either using pull or push system. Pull system is were product completion is delayed until customer order with the use of just in time. E.g. putting dye on a sweater to meet the customer requirements of having a particular colour. Whereas the push system produces according to the forecast and previous sales, therefore pushing inventory into the market.
When dealing with inventory there are dependent
and independent demand systems. Dependant demand systems are MRP, MRP II, JIT, and JIT II...
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