Effective Inventory Management Analysis

In this final paper for Managerial Finance I will attempt to show how the supply chain inventory management method can be affected depending on the situation of the retailer. Studying the control method for problems in inventory, which would include both, excesses in inventory as well as shortages, and hoping to minimize loss.

With the high costs of inventory, retailers need to manage costs of inventory and operations, keeping costs in line with sales and managing cash flow is a key capability for success. A successful retailer is able to match inventory purchases with their consumer sales at a similar rate, maintaining inventory turnover and cash flow through the business.

But let’s take a look closely at what is inventory in certain industries. Inventory in the agricultural industry is the growing crops, developing animals held for sale, harvested crops, livestock held for sale, and secondary products like calves from dairy herds and wool from sheep. In the airline industry, the inventory is used for own consumption which sets it apart from the original definition of inventory. Their inventory curtails mainly of spare parts and materials and supplies to be used in the operation of the airline. For contractors that are into construction, inventory is the small tools that are used in the construction activities. For software, the inventory is the tools and technological products associated with the production of computer software. These are a few scenarios of what is inventory in some industries. Let’s see now some issues associated with inventory, the historical aspects pertaining to U.S. GAAP and IFRS, revenue recognition and measurement rules, presentation and disclosures, and any upcoming developments that affect inventory.

Perhaps the inventory play the most fundamental role in supply chains is to make it easier the balance of demand and supply. In order promote and effectively manage the forward and reverse flows in the supply chain, company must deal with upstream supplier exchanges and downstream customer demands. This puts an organization in the position of trying to find a balance between fulfilling the

Inventory management is the supervision and calculating of the ordering, storeroom and use of mechanism that a company will use in the manufacture of the items it will sell

Berman et al (2006) identified inventory and transportation as two key contributors of supply chain total cost. They require keen attention for supply chain efficiency to be realized. Inventory costs include; Capital cost that forms the largest factor of inventory carrying cost. Companies must balance money held inform of inventory and money required for daily operations. Inventory is treated as an asset in the balance sheet hence attracts taxation from most governments. To cover against loss and damages, insurance premiums are paid. When inventory utilization is slower than expected there is a likely hood of obsolesce. This reduces the actual value of that inventory. There is also storage costs incurred in form of rent or lease of the space stocks are held. Inventory also attracts fixed costs that do not change with the volume of inventory kept. These are calculated as warehousing costs such as utilities and wage (Goldsby et al. 2005)

In a business accounting context, the word inventory is commonly used in American English to describe the goods and materials that a business holds for the ultimate purpose of resale. In the rest of the English speaking world stock is more commonly used, although the word inventory is recognised as a synonym. In British English, the word inventory is more commonly thought of as a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished.[1] In American English, the word stock is commonly used to describe the capital invested in a business, while in British English, the word share is more widely used in the same context. In both British and American English, stock is

What is inventory control? Inventory control means a lot of key things that are very important to a firm or small business to maximize use of inventory. The goal of inventory control is to strive and create the maximum profit from the least amount of inventory investment without interfering with customer 's satisfaction relationships. Retailers and distributors have a really heavy impact on the processes of inventory because of the investment into it.

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Inventory management systems are very useful when applying them in the correct manner. As a human resource specialist working for the US Army, our inventory management systems are extremely important as the defense of our nation somewhat rests on how we best allocate the human resources to the places that need them within the system.

Inventory management can be difficult in today's economy where sales can fluctuate and seasonal sales come and go. Inventory management can present barriers to success with unavailable or inaccurate data, inability to integrate total cost measures, inability to measure product enhancements or new products, no agreement on when to measure or record, and not enough organizational commitment (Smeltzer, 2003). Inventory technology models can present problems with Economic Order Quantity (EOQ) calculations, inaccurate inputs, and conflict with corporate strategies and goals (Piasecki, 2012). Without proper management, the organization could end up with excessive underselling stock and shortages of selling stock.

In the first week, line stops occurred almost hourly. Today line stops fell to a few per week.

Inventory / warehouse are the goods and materials that a business /organization holds for the ultimate purpose of sale.

All organizations have difficulty managing their inventory. The usual reason is the inability to forecast adequately, when items are added to inventory, it is in anticipation of demand. Also, If the demand is later than expected or never materializes, the result is excessive stock and if the demand is sooner or stronger than anticipated, the result is inadequate stock. Factors that tend to reduce inventory are more accurate forecasts, shorter lead times, integrated synchronized operations, technology upgrades, improved communication networks, and standardization (Brown, 1959; Lee & Billington, 1992).

Inventory is considered to be the raw materials, work-in-process goods or completely finished goods that are a portion of a business 's assets that are ready for use or will be ready for sale to customers.