What are the implications of having supply greater than demand?

Having supply greater than demand typically results in wasteful costs. This occurs because excess inventory or production incurs additional costs without generating corresponding revenue. For instance, companies may need to spend money on storage, handling, or even markdowns to clear out surplus goods.

Moreover, the presence of excess supply ties up resources that could have been utilized elsewhere in the organization, leading to inefficiencies in operations. The accumulation of surplus goods can also lead to deterioration or expiration of products, particularly in industries like food and pharmaceuticals, further compounding wasteful costs.

While increased customer satisfaction and reduced operational efficiency can be indirectly related to scenarios with supply greater than demand, they are not the primary implications. Opportunity loss is more relevant to when the demand is not met rather than excess supply itself. Thus, the most direct implication of having supply that exceeds demand is indeed the occurrence of wasteful costs.