1. JIT (Just-in-Time)
Good:
Low inventory cost
Less risk of products becoming outdated
Bad:
Stockouts if supply chain breaks
Can't handle sudden high demand
2. Warehousing
Good:
Can buy in bulk for discounts
Always have stock available
Bad:
High storage costs
Electronics can become obsolete quickly
3. Overstocking
Good:
Never miss a sale
Bad:
High risk in electronics (models update fast)
Money stuck in old inventory
4. Understocking
Good:
Very low inventory cost
Bad:
Lose sales when items sell out
Customers get frustrated
Recommendation: Smart Mix Strategy
Best choice: JIT + Small Safety Stock
Why this works best for electronics:
Use JIT for most items - avoid storing products that get outdated fast
Keep small safety stock only for popular, stable items (like cables, popular phone models)
Never fully overstock - electronics lose value too quickly
Never fully understock - losing customers is worse than storage cost
This balanced approach saves money on storage while keeping customers happy.