What occurs when supply is less than demand?

When supply is less than demand, it typically leads to opportunity loss and customer dissatisfaction. This situation occurs because not all customer needs can be met; therefore, some customers may have to wait for their products or services, or they may choose to seek alternatives elsewhere. This can damage a company's reputation and customer relationships, as consumers are likely to express frustration when they cannot obtain what they desire in a timely manner.

Additionally, the mismatch between supply and demand can result in lost sales opportunities, as potential customers may turn to competitors who can fulfill their needs promptly. In industries with high competition, this can significantly impact market share and long-term profitability. The inability to satisfy customers fully during periods of high demand underscores the importance of effective supply chain management and the need for businesses to balance their capacity with customer demand reliably.