The term “inventory” has been referred to as the stockpile of the product a firm is offering for sale and the components that make up the product. What is Inventory Management – Meaning of Inventory Inventories that are mismanaged can create significant financial problems for a business, whether the mismanagement results in an inventory glut or an inventory shortage. It also costs money to store, track and insure inventory. Inventory management is the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale.Ī business’s inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold. Inventory management forecasts and strategies, such as – a just-in-time inventory system, can help minimize inventory costs because goods are created or received as inventory only when needed. However, possessing too little inventory isn’t good either, because the business runs the risk of losing out on potential sales and potential market share as well. Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders/owners. Inventory is the raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale. What is Inventory Management: Meaning, Definition, Concept, Types, Objectives, Abc Analysis, Forms, Factors, Methods, Reasons, Motives, Costs, Risks, Techniques, Importance and More… What is Inventory Management – Introduction
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