What may indicate low-quality inventory?

Low-quality inventory is often indicated by its limited shelf-life. This characteristic suggests that the inventory is perishable or subject to becoming obsolete quickly, which can lead to increased risks for the company. For example, items with a limited shelf-life, such as food products or certain technology, must be sold within a specific timeframe; otherwise, they may lose value or become unsellable.

In contrast, high demand among customers typically signals a strong product offering, indicating that the inventory is desirable rather than of low quality. Stable pricing generally suggests solid market positioning for products, which can reflect their quality and consistency. Lastly, diversification in stock can actually be a strategy to mitigate risk by spreading it across various products, which does not inherently relate to the quality of any single inventory item. Therefore, limited shelf-life is the key indicator here, directly tying to the notion of low-quality inventory.