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Business Inventory Requirements

Managing the inventory of a business is important. Having insufficient stock on hand can often result in lost sales and dissatisfied customers. However, having too much inventory on hand can be financially strenuous as your available cash is tied up in product that sits in your warehouse. Businesses that successfully manage their inventory keep enough on hand to satisfy demand and replenish that inventory just as their supply is running out. Firms that are seasonal in nature or that have fluctuating demand keep a 'safety stock' on hand to make sure they can accommodate unanticipated need.