INVENTORY MANAGEMENT MEANING OF INVENTORY

Transcript:INVENTORY MANAGEMENT MEANING OF INVENTORY:
INVENTORY MANAGEMENT MEANING OF INVENTORY MANAGEMENT Inventory management refers to the process of ordering,storing,using and selling a companys’ inventory. This includes the management of raw materials, components, finished products, as well as warehousing and processing of such items. OBJECTIVES OF INVENTORY MANAGEMENT The main objective of inventory management is to determine the level for each type of inventory. For this purchasing and carrying costs should be compared with its benefits. For example, when a firm purchases in bulk quantity, its out of stock costs and risk decrease but in case it continues to purchase, it reaches a point where its carrying costs exceede its benefits. Therefore, the management should maintain only a proper level of inventory. Not only the financial manager is concerned with inventory management, but it also affects marketing and production managers. For determining an optimum level of inventory, proper co-ordination among all of them is essential. OBJECTIVES OF INVENTORY MANAGEMENT(explained in detail) To ensure that the supply of raw material and finished goods will remain continuous so that production process is not halted and the demands of the customers are duly met. To minimize the carrying costs of inventory. To keep investment in inventory at the optimum level. To reduce the losses of theft, obsolescence and wastage, etc. To make arrangement for the sale of slow moving items. To minimize inventory ordering costs. Features of Inventory Management Comprised of many components, the inventory management system makes handling the inventories an easy and simpler task. Owing to the inventory management services, the overall efficiency and productivity of the business improve. It is essential to use such kinds of inventory software for the business as they handle the regular tasks and time consuming chores efficiently and this, in turn, lets the focus be on the production part. The following are a few of the features of an inventory management system:- ORDER MANAGEMENT: With the help of a proper and effective inventory system, an adequate amount of inventory can maintain at all times. The system raises an alarm in the case where the inventory drops down a specific threshold limit or exceeds over and above the prescribed limit. ASSET TRACKING: Tracking of the asset is yet another feature of asset management. In the case where there is a specific product/raw material and it’s not easily traceable with the naked eye or stored in the warehouse, then in that case measures