• Source of information A credit analyst may use one or more of the following sources of

information

1. Financial statement

2. Credit rating and report

3. Bank checking

4. Trade checking

5. The company’s own experience

• Economic order quality is an important concept in the purchases of raw material and in the
storage of finished goods and in transit inventories.

• Under condition of uncertainty the firm must usually provide for a safety stock, owing to
infatuations in demand for inventory and in lead times .by varying the points at which the order is
placed one varies the safety stock that is held.

• The optimal order quantity for a particular item of inventory depends on the item’s forecasted
usage, ordering cost, and carrying cost. Ordering can mean either the purchase of the item or its
production. Ordering costs include the costs of placing, receiving, and checking an order. Carrying costs
represent the cost of inventory storage, handling, and insurance and the required return on the
investment in inventory.

• Just-in-time is an approach to inventory management and control in which inventories are

acquired and inserted in production at the exact time they are needed.