Certified Materials and Resource Professional Practice

When there is a significant price drop of a product compared to a competitor's offering, obsolescence reserve adjustments may be necessary. This is because such a price drop often indicates that products might not be selling as quickly, leading to inventory that may become outdated or less desirable over time. Companies typically maintain an obsolescence reserve to account for potential losses on unsold inventory. If products become less valuable due to price changes or shifts in market demand, adjustments to this reserve help ensure that the company accurately reflects the potential for loss associated with excess or outdated inventory.

The other options do not align as closely with the implications of a price drop. For instance, restocking inventory at an increased rate might not be necessary if sales slow down due to the drop in price. Enhancing company resources could imply expanding operations or spending more, which is typically not a reaction to decreased sales velocity. Lastly, customer satisfaction could potentially increase due to lower prices, contrary to the suggestion that it would decrease.