Shortage and Surplus Business & Marketing Essay Paper (Essay Sample)

Shortage and Surplus
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Shortage and Surplus
An inventory surplus occurs when the quantity supplied is greater than the quantity demanded. Excess supply causes downward pressure on the price of the affected product. Customers will in turn demand more of the price subsidized product bringing the market to a price-quantity equilibrium. Among the common causes of surpluses is unreliable suppliers, variability in demand, and poor inventory management.
To deal with surpluses, I would start by repositioning the affected products in the store with intentions of remarketing. Second, I would discount the product prices say by 20% with the hope of gaining and keeping customers. Third, I would group certain products together, complimentary or similar items, with the lesser being offered as a freebie or incentive to buying the larger. Finally, I would see if I can return or exchange them before considering selling them to online marketplaces or liquidation companies.