Certified Materials and Resource Professional Practice

The correct answer, which identifies a drawback of decentralized inventory, highlights the higher potential for obsolescence that can arise when inventory is spread across multiple locations rather than centralized in a single warehouse. In a decentralized system, individual locations may not coordinate effectively, which can lead to some items being overstocked while others are understocked. This inefficiency can increase the likelihood that certain items will remain unsold for extended periods, especially if demand fluctuates or if products become outdated.

In contrast, centralized inventory systems often facilitate better inventory management practices and more accurate demand forecasting because all stock is held in one location, enabling clearer visibility and control over inventory levels. The challenge of obsolescence is particularly pronounced in industries where product life cycles are short or where consumer preferences shift rapidly, making it essential to manage inventory dynamically.

The other options do not correctly represent a primary drawback associated with decentralized inventory. The need for a single warehouse does not apply because decentralized systems, by definition, do not rely on a single warehouse. While increased staffing might be a consideration for managing multiple locations, it is not inherently a drawback of decentralization itself. Lastly, a decentralized approach can often enhance responsiveness to market demands by allowing locations to cater more directly to their specific customer bases.