Today, we see a world of cut throat competition. In this competitive world, no industry can afford to take things casually. Even a hair line gap would be enough for a competitor to take hold and seize the position of the company that has been casual and careless. The production of goods and its subsequent delivery plays a major role for any company to build a firm foot hold in the market. If the production process has to go on unhampered, managing inventory is very important.
[...] This process helps the business to ensure that the stock does not go down a certain margin and that orders for new stock are placed on time. After we have understood the various terminologies related to stock, we can now understand inventory management. II. Inventory Management A. The elements of inventory management Inventory management involves ways and methods to store and preserve materials or goods needed by industries or commercial stores. It also involves handling and defining product requirements in a rational way. Inventory management includes: The physical aspects (warehousing, storing products, handling); Financial aspects (valuation of inventory; determination of order dates and order quantities). [...]
[...] The main methods of inventory management 1. The economic management of stocks (Wilson method) The order is placed when the stock reaches the warning level. For stock that has a steady demand, it is possible to calculate the optimal rate and optimal quantity of order for each delivery with the following formula. Q = * C * / * N = C / Q Q = optimal number of products to be ordered, C = annual consumption quantity, L = cost of placing an order, U = unit price of products in stock, T = rate of inventory carrying cost rate, N = Fulfillment 2. [...]
[...] If an inventory check is conducted periodically, there is an advantage. This process allows the business to view all goods presented for sale and highlight sections that do not rotate. This can generate future actions on sales such as promotions and relocation. B. Ongoing monitoring Ongoing monitoring allows the following of stock, section by section, day by day. Generally, this system applies to items of significant value, at relatively low turnover, for which replenishment is scheduled and is necessary to have, in order to not harm the business. [...]
[...] The stock should be insured and these result in heavy inventory costs. B. The financial impact of inventory turnover Inventory turnover is the number of times a particular item stored in the stock has been sold in a year. It is calculated as follows: R = Cost of sales (in value or units) / Average stock (in value or units) The stock cover expresses the rotation in days: 360 / R C. The turnover rate and the borrowing of stock When inventory is financed by a credit provider and is sold before the credit (credit) has been given, it allows the credit to be used for purposes other than the stock. [...]
[...] The Criteria behind Strategic Inventory Management Inventory management begins with the definition of product requirements and is based on: Trade Policy: To have a good trade policy in place, constant information on customer needs will have to be collected. This information can be obtained from the client database, which has information collected during a qualitative market study. Apart from this, information can also obtained externally through fairs, magazines etc. The range: depends on the customer's expectations. This choice is what will decide the product policy and create the stock. [...]
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