Which strategy is effective for managing seasonal fluctuations in inventory?

Implementing buy-backs or return agreements with suppliers is an effective strategy for managing seasonal fluctuations in inventory because it allows a business to mitigate risk associated with unsold goods. This arrangement enables a retailer to return excess inventory to suppliers after peak seasons, reducing the financial burden of overstocked items. By having this safety net in place, businesses can order more stock during high-demand periods without the fear of retaining excess inventory that may not sell once the season ends. This flexibility in inventory management can lead to improved cash flow and more effective use of resources, as the retailer is not left with a large amount of unsold stock that could lead to markdowns or heavy losses.

Other strategies may not provide the same level of risk mitigation or flexibility, making buy-backs a particularly strategic choice for businesses looking to manage seasonal fluctuations effectively.