Stock that exceeds demand and is unlikely to be sold quickly is referred to as excess inventory. It raises the risk of spoiling or obsolescence, ties up working capital, and has high holding costs. Poor forecasting, high minimum order quantities, or overreactions to transient fluctuations in demand are the usual causes of excess inventory. Finding and getting rid of excess inventory is crucial for optimization initiatives, which are frequentlyaccomplished through markdowns, reallocation, or enhancements to the planning and procurement processes.
