What is more risky for inventory management?

In inventory management, having too much stock is indeed considered more risky due to several interrelated factors. Excess inventory ties up valuable resources and capital that could be used elsewhere in the business. This can lead to financial strain, especially if storage costs increase or if the inventory becomes obsolete over time.

Additionally, carrying excess inventory can result in higher holding costs, including warehousing, insurance, and taxes. It increases the risks associated with markdowns or write-offs if the inventory is not sold within a certain timeframe, particularly for perishable goods or rapidly changing consumer trends. Moreover, having too much stock may also lead to inefficient operations, where space and labor could be better utilized with a more optimal inventory level.

While having too little stock can lead to stockouts, lost sales, and disappointed customers, the immediate financial impacts and long-term consequences associated with excess inventory typically make it a more pressing concern in the context of risk management.