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I would support Beverly's point of view, and would also express the same concern he has regarding the growing obsolescence inventory. This problem could affect economically to a company like Bright-lite and reduced their profits because this is money that the company is loosing just by the inventory sitting in the factory. I think the company should focus in efficiently fulfill customer orders quickly, minimize the obsolescence inventory and create strategies to move this inventory at reduced prices so it won't count against the company's profit.

Answer 1

I Strongly Agree The Beverly's point of view in respect of obsolete stock

Investment poured on Obsolete stock which results in parking of funds and which will increase the Burden of interest expense if the working capital are taken on loan and loss of opportunity cost over a period of time due to lack of funds to invest in a Highly Demanded Products.

Parked Funds which purely effect the Profits of Business, Sometimes heavily, If the funds are parked in obsolete then temporary cash to pay for salaries and working capital ,which will influence on to borrow additional funds in order to repay the dues towards supplies, salaries , business expenses ,and These Borrowings again impact on increase of interest expenses lead to drastically decrease the profits of the business.

It sometimes, May lead to management dissatisfaction and which requires strategies are modified again which leads to more wastage of valuable time and money by way doing researches and calling industry expert in order to formulate new strategies

Various steps should be taken:

It may be disposed off to get quick money, which help to recovery the portion of parked funds and Thereby Reducing the Interest burden too and avail the Opportunities towards earning money by Investing.

If it is not possible to dispose off even at lower cost rates then check other alternative options towards reducing the funds/expenses towards corporate social responsibility which is must be required as per law to spend from portion of profits, thereby reduce the burden of corporate social responsibility and seeking Income tax benefits i.e under IRS If inventory is donated then such cost of inventory can be deducted Plus half of the total amount of cost

It also helps towards reducing the maintenance and storage cost of such obsolete inventory such as supervisory salaries and Space of rent.

Why reordering the quantity the management must analysis the Product life cycle and Forecast the Expected price and If demands seems to be falling then ways to quick dispose off like offering quantity with another one, giving at discount and take initiatives towards disposing it off.