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Inventory management comprises of the following:-

  • Disposition of materials.

There are mainly three kinds of inventory that are managers are concerned about. Namely:

  • Raw materials.
  • In-process or semi-finished goods.
  • Finished goods.

When a manager is able to manage the above mentioned inventories, he/she can effectively do the following:-

  • Capital that is involved in unnecessary inventory can be released.
  • Production control can be enhanced.
  • Protection against obsolescence, deterioration and/or theft.

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Inventory management is done mainly because of the following reasons:

  • It helps to balance the stock so that value, size, color, style, and price can be in proportion to demand or sales trends.
  • It helps obtain the best rate of stock turnover for each and every item.
  • It helps in lessening of expenses and markdowns.
  • It helps in sustaining an excellent business reputation for having new, fresh merchandise in wanted sizes and colors always available.

Mainly we can select from three major approaches that can be used for inventory management for any type and size of operation. The system that is actually selected depends upon the type of operation and the amount of goods.

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