One benefit of effective inventory management is the reduction of which of the following risks?

Effective inventory management plays a crucial role in minimizing the risk of overproduction. When inventory is accurately tracked and managed, businesses can align their production with actual demand, ensuring that they are not creating more products than can be sold. This alignment helps optimize resource allocation and prevents excess inventory from accumulating, which can lead to increased holding costs and wastage.

By effectively managing inventory, organizations can also streamline their production processes, reduce excess materials and finished goods, and enhance overall operational efficiency. These practices not only support cost-efficiency but also enable businesses to respond swiftly to changes in market demand without being burdened by unwanted surplus.

In contrast, while understaffing, increased customer wait times, and high shipping costs can be influenced by various operational factors, these issues are not directly linked to inventory management as the primary focus. Inventory management primarily addresses the balance between supply and demand, making it an essential tool for mitigating overproduction risks.