Final answer:
When the cost of inventory increases, it can impact the overall inventory cost for a company like Consignor Pepsi. The company may need to increase their product prices to maintain their desired profit margin. This increase in inventory cost can affect the pricing strategy and profitability of the company.
Step-by-step explanation:
In business, when the cost of inventory increases, it can affect the overall inventory cost for a company like Consignor Pepsi. As the cost of production increases, the company may need to increase the price of their products to maintain their desired profit margin. This is because the cost of production and the desired profit equal the price that a firm sets for their product.
For example, if the cost to produce a Pepsi increases, Consignor Pepsi may need to increase the price of Pepsi to cover the higher cost and still achieve their desired profit. This increase in inventory cost can impact the pricing strategy and profitability of the company.