（a）Explain one advantage and one disadvantage of CR holding inventory． Advantage： . Explanation： . . . . . Disadvantage： . Explanation： . . . . .

Award 1 mark for each reason (max 2).
Award a maximum of 3 additional marks for each explanation of the reason why holding inventory is important - one of which must be applied to this context.

Reasons might include:
Advantages:
- Demand can easily be met from the inventory of finished products - this means customers are less likely to be disappointed by deliveries being late - and recommend the business to their friends
- To ensure unexpected increases in demand can be met - this will avoid losing customers to competitors - keeping customers satisfied / maintaining a good reputation
- Without inventory if CR opens its own shop there will be no products for customers to view - and they will not be able to see the excellent quality of the products - therefore may be less likely to make a purchase
- May allow a wider variety of different products to be sold
- Allows quick replacement of faulty goods

Disadvantages:
- Ties up cash - if too many raw materials are held then the cost may have been paid by Charly - but no revenue will have been received leading to a possible cash-flow problem
- Too much inventory increases risk of products going out-of-date / being stolen / being damaged - the colour or pattern on rugs could go out of fashion - leading to lower sales / increased cost of storage
- May take up too much storage space

For example: Toensure unexpected increases in demand can be met (1) this will avoid losing customers to competitors (1) and will keep customers satisfied and keep buying from CR (1) when they want a new rug for their home (app).

Application could include: rugs; sell through wholesalers / sell online / sell through own shops; luxury product; forecast demand is 20 rugs per week; store inventories of raw materials / finished products; new factory.