What challenges might arise from poor inventory management?

Poor inventory management can lead to significant challenges, all of which are illustrated in the correct answer.

When inventory is not effectively managed, businesses may experience increased costs due to factors such as excess inventory, which incurs additional storage and handling expenses. Conversely, understocking can lead to lost sales opportunities, as customers may not find the products they want when they want them, resulting in dissatisfaction and potentially losing those customers to competitors.

Additionally, operational efficiency can suffer due to poor inventory practices. For instance, if a company has too much inventory, resources may be tied up in storage and management, leading to waste and inefficiencies in operations. On the other hand, if items are frequently out of stock, it can affect production schedules and overall workflow.

Thus, the correct response encompasses all of these challenges, underlining the importance of effective inventory management for maintaining customer satisfaction, controlling costs, and ensuring smooth operational processes.