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winL.Vi
l
lanuev
a

BSACC2BLK-
1

1.Whyi
sinv
ent
orymanagementi
mpor
tant
?Expl
aini
nyourownwor
ds.

Theimportanceofinv ent
or ymanagementcannotbest ressedenoughespeci
all
yfor
eCommer ceandonl i
ner etailbr
ands.Accurat
einvent
orytracki
ngall
owsbrandstoful
fi
lorder
s
ti
melyandaccurately.Inventorymanagementinbusinessesmustgr owasthecompany
expands.Withastrategicplaninplacethatopti
mizestheprocessofover
seei
ngandmanagi ng
i
nventory,
incl
udi
ngr eal-t
imedat aofinvent
orycondit
ionsandlevel
s,compani
escanachieve
i
nventorymanagement

2.Gi
veanexampleofi
nventor
ymanagementpr
ocessofasmal
lcompany
/busi
ness.Br
ief
di
scusseachoft
hei
rprocedur
es.

.FI
FOv
s.LI
FO

Firstin,fi
rstout(FI
FO)andlastin,
fir
stout( LIFO)areaccountingmet hods(al
soknownas
"cost i
ng")basedonhowpr oductsmov ethroughy ourwar ehouse.FI
FOi sausefulsyst
em f
or
busi nessesthatsel
ltheol
destinventor
yf i
rst.Ifi
twasf ir
stint
ot hewarehouse,i
tshouldal
sobe
fir
stoutt hedoorwhensomeoneor dersthatpr oduct.Thi
skeepsi nventor
yasfreshaspossibl
e,
whi chisessentialf
orperi
shableorexpir
inggoods.

2.Demandf
orecast
ing

Demandforecasti
ng(orsalespr
oject
ions)hel
psy ouunderstandhowmuchofeachpr oducty
ou
needt
ohav eonhandatal lti
mestomeetcust omerdemand.Forest abl
i
shedbusinesses,
demandforecast
ingshouldbebasedonhi st
oricalsal
esdata.Newerbusinessesmightneedto
rel
yonassumpt i
onsandindustr
ydatauntilt
heyhav easaleshist
oryofthei
rown.

3.Mi
nimum or
derquant
it
yvs.economi
cor
derquant
it
y

Minimum or derquanti
ty(MOQ)andeconomi corderquant it
y(EOQ)ar etwodi ff
erentmet hodsa
businesscanuset odeterminewhent or eorderproducts.MOQf ocusesonmai ntai
ningthe
minimum possi bl
eamountofeachpr oductt y
peasel leriswill
ingtofulf
il
l.High-ti
cketit
ems
tendtohav ealowerMOQ, whil
elow- costitemsof t
enhav eahi gherMOQ.I tisimpor t
anttot ake
thi
sintoaccountwhenr eor
deringproduct sfrom suppl i
ers;considerasupplier'
sMOQf ora
parti
cularproductagai
nstyourownsal espr ojecti
ons.TheEOQmet hodismor ecommonf or
manuf actur
ers,whichhavetoaccountf orvariablecostslikerawmat eri
als,producti
onand
fl
uctuatingdemand.Itisdesignedforcompani estokeepcost sdownbypur chasingt he
greatestamountpossibleofmul ti
plepr oductuni t
stomi nimizetheneedt or eorderi
tems
i
ndi
vi
dual
l
y.

4.ABCanal
ysi
s

AnABCanalysi
shel
psyouunder
standwhatproduct
sar
emostprofi
tabl
eandwhi
char
emost
cost
ly.Ast
henamesuggest
s,i
tbreakspr
oductsdowni
ntot
hreecat
egories.

A:Thesepr
oduct
sarethemostval
uabl
eandcostt
hel
eastt
ost
orel
ong-
ter
m.Thesepr
oduct
s
cont
ri
butegr
eatl
ytoabusi
ness'
sprof
it
abi
l
ity
.

B:Thesearemidr
angeproduct
sthatar
eimpor
tantsal
est
omake,
butnotasbi
gti
cket
sas
pr
oductsintheAcategor
y.

C:Thesetendtobesmall
-ti
cketi
temswi
thhi
ght
urnov
er.Indi
vi
dualsal
esofthesepr
oductsare
notasimportantt
oabusinessasit
emsi
ntheAorBcategori
es,buthi
ghvol
umesofCpr oduct
sal
esarecrit
icalt
opr
ofi
tabil
it
y.

5.Saf
etyst
ocki
nvent
ory

Safetystockinv
entoryisti
edt oyoursal espr
oject
ionsandinfluencesy ourreorderquantit
ies.I
t
i
sespeci al
lyimportantt
oy ourbestsell
ingoressenti
alproducts.Safetystockistheext ra
i
nventoryy ouorderbeyondy ourexpecteddemand.Whi leover-or
deringisnev eradvisabl
e,iti
s
usefultohaveaf ewmor euni t
sthany ouexpectyou'l
lneed,especial
lyifyouant i
cipatethatit
em
wil
lcontinuetobeahotsel ler.

6.Dr
opshi
ppi
ng

Dropshippi
ngistheprocessofrecei
vinganorderfrom acustomerandhavingyoursuppl
i
er
shiptheproductsdi
rect
lytothecustomer.Thiscutsouttheneedforastor
agefacil
it
yorfor
keepi
nganyi nvent
oryonhand.Itisbestreser
vedf orr
areordersori
temsyoucannot
accommodat einyourwarehouse,becauseitmeansy ourcustomer'
ssat
isf
acti
onisinthe
handsofy oursuppl
ier
,rat
herthanyourownbusi ness.

7.Cr
oss-
docki
ng

Cross-
dockingisamet hodt hatpri
orit
izesef
fi
ciency.Adel i
veryt
ruckwill
unloadaty ourfaci
li
ty,
dir
ectl
yintotrucksshi
ppingy oursalesouttocustomer s.Thi
seliminat
estheneedt obringnew
i
temsi nt
oy ourstor
agefacili
tyandby passesyourinventorymanagementpr ocess.Inst
ead,the
i
temsgor ightoutasyour eceivethem.Thismet hodisbestf ori
temsplannedfor"justi
nt i
me"
shippi
ng.