Which strategy can help improve inventory turnover?

Implementing effective pricing and optimizing the supply chain directly addresses the key factors that influence inventory turnover. A high inventory turnover ratio indicates that a company is selling its inventory quickly and efficiently, which is essential for maintaining cash flow and reducing holding costs.

Effective pricing strategies ensure that products are competitively priced to attract more customers, leading to increased sales. When customers perceive the value in the pricing offered, they are more likely to make purchases, which helps to reduce the amount of unsold inventory.

Optimizing the supply chain is equally important, as it streamlines the process of getting products from suppliers to customers. By enhancing relationships with suppliers, managing lead times, and improving logistics, a company can maintain the right amount of inventory needed to meet demand without overstocking. This not only helps in selling products quickly but also in keeping inventory levels manageable, further boosting turnover rates.

In contrast, increasing stock levels and reducing demand, decreasing production while increasing supplier costs, or limiting product offerings might adversely affect customer satisfaction, sales, or profitability, thus negatively impacting inventory turnover rather than improving it.