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Advantages of high level of stocks are many like it provides a buffer to the companies against the high demands. If the prices of the products are expected to increase in future then a high level of inventory can also give a capital gain to the companies. High level of stocks can also eliminate the risk of fall of supply in the future. Shortages of goods in the market in future can be handled by keeping high levels of inventory.
On the other hand, the main disadvantage of keeping high levels of finished products will increase the costs of the warehouse management. Secondly, if the prices of the finished goods are expected to fall then the company can get the capital loss. Poor inventory management can result in the loss of inventory like obsolete inventory problems.
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