When should merchandisers be particularly careful about inventory levels?

Merchandisers should be particularly careful about inventory levels when demand and forecasted sales are uncertain because this directly affects how much inventory they should keep on hand. Uncertainty in demand can lead to either surplus inventory, which ties up capital and can lead to increased holding costs, or stockouts, which can result in lost sales and dissatisfied customers.

In situations where demand is unpredictable, having the right amount of inventory becomes crucial for maintaining a balance between meeting customer needs and minimizing excess stock. By being vigilant during these times, merchandisers can implement strategies such as adjusting orders, running promotions to clear excess inventory, or employing demand forecasting techniques to better understand likely purchasing patterns. This proactive approach helps mitigate financial risk and ensures a smoother operational flow in inventory management.