Inventory Management Project Report3/17/2021
Raw materials represent various materials a company purchases for its production process.This includes the management of raw materials, components and finished products, as well as warehousing and processing such items.For companies with complex supply chains and manufacturing processes, balancing the risks of inventory gluts and shortages is especially difficult.
To achieve these balances, firms have developed two major methods for inventory management: just-in-time (JIT) and materials requirement planning (MRP). In retail, manufacturing, food service and other inventory-intensive sectors, a companys inputs and finished products are the core of its business. A shortage of inventory when and where its needed can be extremely detrimental. At the same time, inventory can be thought of as a liability (if not in an accounting sense). A large inventory carries the risk of spoilage, theft, damage or shifts in demand. Inventory must be insured, and if it is not sold in time it may have to be disposed of at clearance pricesor simply destroyed. For these reasons, inventory management is important for businesses of any size. Knowing when to restock inventory, what amounts to purchase or produce, what price to payas well as when to sell and at what pricecan easily become complex decisions. Small businesses will often keep track of stock manually and determine the reorder points and quantities using Excel formulas. Larger businesses will use specialized enterprise resource planning (ERP) software. The largest corporations use highly customized software as a service (SaaS) applications. Appropriate inventory management strategies vary depending on the industry. An oil depot is able to store large amounts of inventory for extended periods of time, allowing it to wait for demand to pick up. ![]() For businesses dealing in perishable goods or products for which demand is extremely time-sensitive2019 calendars or fast-fashion items, for examplesitting on inventory is not an option, and misjudging the timing or quantities of orders can be costly. ![]() Inventory has to be physically counted or measured before it can be put on a balance sheet. Companies typically maintain sophisticated inventory management systems capable of tracking real-time inventory levels. Inventory is accounted for using one of three methods: first-in-first-out (FIFO) costing; last-in-first-out (LIFO) costing; or weighted-average costing. An inventory account typically consists of four separate categories.
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |