As the level of substitutability for a product increases, its stockout costs to the manufacturer:
A) increase.
B) decrease.
C) stay the same.
D) can't be determined.

Question

Quizplus · Accepted Answer

When the level of substitutability for a product increases, it means consumers can easily find alternatives if the product is out of stock. This situation pressures the manufacturer to maintain stock levels to avoid losing sales to competitors, thereby increasing the stockout costs.

As the Level of Substitutability for a Product Increases, Its