Planned Overproduction: Quantifying Unsold Inventory and its Financial Impact in the Fashion Industry, Leigh Hickey

This study intends to demonstrate that a reduction of unsold inventory levels, still too often neglected today, can generate added value, profits, and positively differentiate the company against its competitors. The objective of this research aims to describe and quantify the amount of deadstock inventory in the fashion industry in order to determine whether current levels are optimal. This paper tests the hypotheses that (a) current levels of unsold inventory are suboptimal, (b) the financial costs of unsold inventory now outweigh that of stockouts for retailers today, and (c) fashion brands value a reduction of deadstock inventory waste because it provides a competitive advantage of increased cash flow, increased profit margins, and brand
loyalty among environmentally and socially focused customers.

Key Terms: Retail, Deadstock inventory, Economies of Scale, Excess Inventory, Forecasting Error, Stockout, Stockout Cost, Sustainability.

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