Perez, Cris Jane E.

BSHM-3A

1. What is Inventory Management?

Inventory management refers to the process of ordering, storing, using, and selling a company's
inventory. This includes the management of raw materials, components, and finished products,
as well as warehousing and processing of such items Inventory management helps companies
identify which and how much stock to order at what time. It tracks inventory from purchase to
the sale of goods. The practice identifies and responds to trends to ensure there's always
enough stock to fulfill customer orders and proper warning of a shortage.

2. What is Distribution Strategy?

Distribution strategy involves coming up with an efficient method of disseminating your
company’s products or services. The goal of this type of strategy is to maximize revenue while
maintaining loyal customers. Your business creates a strategy based on your target customer,
and you may use more than one strategy to reach more than one type of target customer. Your
strategy approach should focus on factors such as how your ideal customer buys your products
or services and how your customer would prefer to buy them. Consider these kinds of questions
when planning your distribution strategy:

 Who is your ideal customer?

 How does the product or service fit the person’s lifestyle?
 What type of purchase decision does it require?
 What are the main priorities for your customers? For example, do your customers care
more about cost or convenience?
 Can you improve the purchasing process to make it better and easier for your customer?

3. Give examples of Distribution Strategy

Hotel distribution helps you create a method for selling hotel rooms, which you determine by
analyzing costs of each distribution channel for selling hotel rooms. Finding the right distribution
channels and choosing the most cost-effective ones at high-demand times will help you
determine when to sell rooms and through which channels to improve profits. Nonetheless, cost
is not the only factor. You may also consider the type of hotel, your customer base and where
your base tends to book hotel rooms.

4. Define Annual Stock Turnover

This rate indicates the number of times the stock in a business has 'turned over', or been
replaced, in a year. Stock turnover rate is considered to be a measure of sales performance;
usually the higher the stock turnover rate, the better your stock/business is performing.
 Inventory includes all goods, raw or finished, that a company has in stock with the intent
to sell.
 Inventory turnover is the rate that inventory stock is sold, or used, and replaced.
  The inventory turnover ratio is calculated by dividing the cost of goods by average
inventory for the same period.
 A higher ratio tends to point to strong sales and a lower one to weak sales. Conversely, a
higher ratio can indicate insufficient inventory on hand, and a lower one can indicate
too much inventory in stock.

5. Define Economic order quantity (EOQ)

is the ideal order quantity a company should purchase to minimize inventory costs such as
holding costs, shortage costs, and order costs? This production-scheduling model was developed
in 1913 by Ford W. Harris and has been refined over time. The formula assumes that demand,
ordering, and holding costs all remain constant.
The formula for EOQ is: