Inventory control

1)      Briefly explain the importance of inventory control. 

1)      Briefly explain the importance of inventory control. 

·        Without adequate inventory control procedures, a retailer will lose sales and thus profit due to being out of stock (stock out).

·        The other reason is that the retailer may experience high inventory costs due to having too much stock (overstock). Waste may occur if products have a shelf-life and could spoil resulting in a financial loss.

1)      State at least one other benefit to a computerized inventory system in addition to keeping count of goods and potential theft monitoring.

·         It can help analyze sales and selling patterns and it can help a retailer to reorder goods when necessary.

1)      List the four objectives of inventory management.

·         Avoid Stockouts,

·          Avoid Overstock,

·          Move goods efficiently,

·          Maximize profits.

1)      Briefly distinguish between the push and the pull systems of inventory.

·         The push system of inventory control involves -forecasting- inventory needs to meet -customer-   -demand-.

 

·         Retailers must predict -which- products along with what -quantity- of goods will be purchased.

 

·         A retailer will then try to meet the forecasted demand and sell, or -push- the goods to the consumer.

 

·         The pull inventory system begins with a -customer’s-   -order-.

 

·         An example of a pull inventory control system is the -Just-in-time- or JIT system.

 

·         The goal is to keep inventory levels to a -minimum- by only having enough inventory, not more or less, to meet -customer-   -demand-.

1)      What is the lean inventory strategy?  Provide an example of your own.

·         Computer companies such as Dell, use this system.  Raw materials are -preordered- and -stored-, but the actual computer is not assembled until -ordered- by the customer.

1)      Briefly explain opportunity costs as it relates to holding stock.

The working capital is tied up in stock that could have been used for another purpose. By having your money already spent and the value now residing in stock, you can no longer use that money on something else.

1)      List three other direct monetary costs to holding stock.

i)       Storage costs- the rent, heating, lighting, maintenance, and of a warehouse or additional factory or office space.

ii)     Insurance costs for fire, flood, theft, etc.

iii)   Interest costs if the stock is financed by an overdraft or a loan from a bank.

1)      State benefit to a computerized inventory system.

·         It can help analyze sales and selling patterns.

·          it can help a retailer to reorder goods when necessary.

·          keeping count of goods acurately

·         potential theft monitoring.

1)      Calculate the inventory turnover of a business with beginning inventory of $1,606,537 and ending inventory of $1,573,560 with a cost of goods sold of $9,318,174.

5.860308034629132

1)      What is the inventory turnover for a company that has a cost of goods sold of $30,477, a starting inventory of 4,708 and ending inventory of $4,028?

6.977335164835165

which is better a higher inventory turnover rate or a lower one?

a higher number is better, more turnover means more profit.

) State a minimum of three different advantages of using RFID technology as a retailer.

·         Saves Time

·         Real-time inventory count.

·         Auto replenish and re-order.

·         Quicker back-room merchandise location

·         Increased accuracy and

·         Provides retailer with trending information.

Formula for inventory turnover

The inventory turnover ratio is calculated by dividing the cost of goods by average inventory