During the COVID-19 pandemic, many places have seen people rushing to supermarkets for daily essentials such as toilet paper, especially when there was a recent breakout in the local area. That has led to empty shelves and stock-outs for a prolonged period of time in many supermarkets, even though the supermarkets and the product suppliers reassured that there is sufficient production capacity.

(1) Related to the different types of costs associated with inventory, explain the rationale of people hoarding products during COVID-19. (9 marks)

(2) From a logistics and supply chain perspective, discuss two reasons explaining why supermarkets experienced stock out for a considerable period of time, when the suppliers had sufficient production capacity