INVENTORY MANAGEMENT

INTRODUCTION

Inventory is the term used to refer to the products that are available for sale and

the raw materials used to manufacture goods that are available for sale. Inventory is

one of the most significant properties of a corporation and one of the key drivers of

sales production and eventual profits for the owners of the company is the turnaround of

inventory. Around the same time inventory should be perceived as an obligation (if not

in an accounting sense). The risk of spoilage, robbery, disruption or changes in demand

lies in a broad inventory. The product must be covered, and it will have to be disposed

of at clearance rates or actually lost if it is not sold on time. Management of inventory

refers to the method of buying, maintaining and using the inventory of a company. This

covers the handling of raw materials, parts and finished goods, as well as the storing

and distribution of those items. 

For organizations of any scale, inventory control is important. It can easily be

complicated choices to decide when to restock supplies, what quantities to buy or make,

what price to pay, as well as what to sell and at what price. Small firms will also

manually keep track of inventory and use Excel calculations to evaluate the reorder

points and amounts. Due to storage costs, spoilage costs, and the possibility of

obsolescence, keeping a large volume of inventory for a long period is typically not

beneficial for a firm. Nevertheless, producing so little inventory still has its drawbacks;

for instance, the firm runs the risk of loss of market share and losing earnings on future

profits. Projections and techniques for inventory management, such as a just-in-time

(JIT) inventory scheme (with backflush costs), may help reduce inventory costs since

only when required are items produced or obtained.