"Working Capital Management" Please respond to the following: Examine the key reasons why a business may not want to hold too much or too little working capital. Provide two (2) examples that illustrate the consequences of either situation. The right level of working capital depends on the industry and the particular circumstances of the business. For example, businesses that only sell services, and do not need to pay cash for inventory need a lower level of working capital. Businesses that take a substantial amount of time to make of sell a product will need a higher level of working capital.
P2: Distribution of retail goods Distribution channels covers three sectors of industry, Primary (Raw Materials) Secondary (Manufacturing) and Tertiary (Services). Distribution centre is part of a logistics chain which include trucks delivering and picking items from the workhouse, movement of goods via: * air * road * train * ship Size of distribution centre is deepens of the business is serves. Businesses would have to plan how they are going to distribute their products or services to their existing customers in order for them to sell. Distribution channels would have to make sure that they give the product or service to the correct people and at the right time, it is very important that they are able to make their profits and efficiency when a customer purchase a product or a service. The customer may have bought it straight from the business or the producer of the product per through the retailer or the wholesaler.
These values are most desirable, not because they minimize costs absolutely, but because they minimize costs in the most simple way. Thus, total costs for the company will equal approximately $139060. iii. Table of Contents Title Page…………………………………..i Executive Summary……………………….ii Table of Contents………………………....iii Introduction, Problem, Purpose…………...1 Findings…...………………………………2 Conclusion………………………………...3 References…………………………………6 Appendices………………………………...7 1. Introduction, Problem, and Purpose The Woodstock Appliance Company carries four products.
Inventory Systems Summary QRB/501 October 8. Inventory Systems Summary Businesses today must ensure that they have an adequate supply of materials for production and finished products for delivery to consumers. Without the utilization of an inventory control system, businesses can find that possessing excess inventory is costly as well as not having an adequate supply of inventory can also become costly because of delays in consumers receiving products, goods and services. Businesses that conduct transactions that include quantifiable goods such as food, clothing, equipment, almost any type of commodity utilized a form of inventory control. The type of inventory control system can vary, depending on the type and size of a company and the type of goods or services being distributed.
Judgement Case 9-1 – Inventory costs; lower of cost or market; retail inventory method Requirement 1 Theoretically, Hudson should account for the warehousing costs related to its wholesale inventories as a part of inventory. All of the necessary costs associated with preparing, and in this case storing, items for sale are to be included in inventory. The key here is that the warehousing cost is related to a particular set of items and for that reason it is important to account for the warehousing cost with the inventory in order to satisfy the matching principle. The matching principle “requires that revenues and any related expenses be recognized together in the same period” (The matching principle). By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold.
Planning and Measuring Performance for Costco Corporation Roger Scmidt MGT/521 February 25, 2012 Roberto Guzman Planning and Measuring Performance for Costco Corporation My week 3 Organizational Plan Assignment was the Costco Wholesale Corporation. I identified its current goals as 1) control costs by reduction of inventory and careful selection of high quality goods and services and careful expansion of its’ domestic market. To elaborate, Costco has been very successful at keeping costs down by minimizing waste and storage expenses with a rapid turnover of its’ inventory. This is at least in part due t0 its’ ability to sell high-demand goods and services for very low prices. Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012).
This reduces the carrying costs of the inventory that is ordered as well as insuring that unused items are not held from month to month. A third way to increase working capital is to realign the billing and payment schedules for the company. Currently products are invoiced to customers at the end of the month with terms of net30. Suppliers invoice the company at the end of the month with terms of net15. This disparity of terms can impact working capital as money flows out in the middle of the month but does not flow in until the end of the month.
The basic difference falls in the area of inventory. Traditional manufacturers produce finished goods, which are then placed in warehouses awaiting sale. In contrast, with a direct-sales, mass-customization firm, the receipt of a sales order triggers the manufacturing process as well as the purchasing system, the latter to acquire needed raw materials. Finished-goods and raw-material inventories (along with work in process) of mass-customizers are, therefore, much lower than the inventories carried by traditional
Food cost managers will generate sales forecasts to reduce the carrying costs of inventory. Perpetual inventory management will track all in store inventory transactions. This includes ordering, receiving, selling, cycle counts, and inventory adjustments. An automated inventory system would allow Kudler fine foods to meet current and future customer demands. This would also save money on hiring and training employees to order products for the stores.
More importantly it can predict what the consumers of the small market of trucking are going to need. With that said, the sales department can direct their focus to a different group of targets or consumers to “persuade” them that Huffman is the company to use. Finally, operations are the last key to this structure. Operations are responsible for the day in and day out functionality of the business. This department makes the everyday choices on and off the scene.