TASK 2: How to avoid Inventory Mismatch?

In MS Word, after reading the Reading Material No. 3, based on your own

opinion, what can be the most effective method in avoiding Inventory

Mismatch? You can cite any business organization who has encountered this

problem and learn from their experience.

There are effective inventory management methods which could improve your

inventory system and to avoid inventory mismatch. (1) The cost of inventory can

be determined using either LIFO or FIFO. The principle of the FIFO method also

known as "First in, First out" is that the first item on the inventory must be the first to

be sold. A great way to keep inventory fresh is FIFO. The principle of the Last-in,

First-out (LIFO) method is that the last item on the inventory is the first to be sold.

LIFO aids in the prevention of bad inventory. (2) The "just in time," or JIT, method

is used by many businesses to avoid the costs of overstocking. They order only

what they need to meet immediate demand using this strategy. The business

saves money on insurance and storage because it does not have any leftover

inventory. When the company's current inventory is about to run out, it places

an order for more. Due to the possibility of stock shortages arising from a slight

delay in placing new orders, this strategy carries some risk. Therefore, proper

planning is required for this approach to ensure that new orders are placed on

time.