Inventory Management Essay

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Inventory Management English Composition II April 14, 2010 Inventory Management Inventory management is first and foremost about specifying the size and placement of stocked goods. Raw materials, goods in process and finished goods, all represent various forms of inventory. Each type represents money that is unavailable until the inventory leaves the company as purchased products. “The inventory represents a large portion of the business investment and must be well managed in order to maximize a business’s profits. Many of today’s businesses cannot absorb the types of losses arising from poor inventory management (” Inventories need to be controlled or else they will be unreliable, inefficient and costly to any company. Having a successful inventory manager, will aid in the success of any business. Successful inventory management involves balancing the costs of inventory with the benefits of having inventory. The research I have conducted explains how many company owners today fail to recognize the value of the true costs of carrying inventory. This includes not only direct costs of storage, insurance and taxes but also the cost of money tied up in the inventory itself. This fine line between keeping too much inventory and not enough is not the inventory managements’ only concern. Other concerns are on how to maintain a wide assortment of stock without spreading the rapidly moving inventory too thin. There are many other concerns on how to obtain lower prices by making volume purchases and having adequate inventory on hand. According to the research I have done, this degree of success in addressing these concerns is easier to determine for some company’s than for other companies. “For example, computing the inventory turnover ratio is a simple measure of managerial performance. This value gives a rough guideline by which inventory managers can

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