What negative consequence can result from overstocking in a warehouse?

Overstocking in a warehouse leads to higher carrying costs and potential obsolescence, making this the best choice. When inventory levels exceed demand, the costs associated with storing excess stock can escalate. These carrying costs include expenses for storage, insurance, and handling, which add financial strain on the business.

Additionally, overstocking increases the risk of inventory becoming obsolete. If products sit on the shelves for extended periods without movement, they can become outdated, damaged, or lost market relevance, leading to markdowns or write-offs. This cycle not only impacts cash flow but can also hinder operational efficiency, as resources are tied up in unsold inventory, diverting funds and space from potentially more profitable items.

Other choices reflect positive outcomes associated with inventory management. However, they do not address the detrimental effects that overstocking can create, thereby reinforcing why the identified consequences of carrying costs and obsolescence are significant in inventory management discussions.