Certified Materials and Resource Professional Practice

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What is the primary reason for having a significant inventory obsolescence?

Changes in market demand

Inventory obsolescence primarily occurs due to changes in market demand. This can be attributed to factors such as shifts in consumer preferences, technological advancements, or the introduction of new products that make existing inventory less desirable or irrelevant. When demand for certain items decreases or disappears altogether, the products may remain unsold, leading to them becoming obsolete.

In contrast, while increased safety stock levels can contribute to excess inventory, they do not directly lead to obsolescence unless those items are not selling. Centralized inventory systems can streamline operations but do not inherently cause obsolescence. Excess management personnel may result in inefficiencies but do not directly correlate with inventory becoming obsolete. Thus, the primary driver for inventory obsolescence is indeed changes in market demand.

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Increased safety stock levels

Centralized inventory systems

Excess management personnel

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