An overoptimistic sales forecast has resulted in excess inve

An overoptimistic sales forecast has resulted in excess inventory sitting idle at a company\'s warehouse. As the manager of the company, your job is to troubleshoot the problem and get results. Your instinctive reaction is to open up new channels of distribution. Discuss (at least) five critical questions you should ask yourself before going ahead with your plan. Justify your response with logical reasoning.

Solution

The questions that must be answered before going ahead with the plan are:

1. What all channels should be opened up for distributing the excess inventory?

This includes the list of distribution channels who are willing to take up the inventory

2. What costs are involved with this process change?

Will the inventory selling through these channels be done at the same costs and what other costs will be involved

3. What monetary benefits will it bring along?

Benefits which will be earned after sales and the demand prospects which arise afterwards

4. Will it not distort the original target areas of the firm? Will they cause any trouble?

Will the original inventory buyers not oppose the firm\'s decision

5. Will it hamper or boost the company\'s reputation and what should be done in future, if this plan becomes successful?

How should future demand be met if the plan becomes profitable