Inventory Management Approaches. Inventory management is the act of keeping track of a company’s stocked goods and monitoring their weight, dimensions, amounts, and location. A large amount of capital, if not the majority of a company’s capital is wrapped up in their inventory. Incremental costs of placing an order for inventory.
Approaches to building an effective inventory management strategy differ widely depending on the size and nature of the business, as well as its inventory requirements and challenges. Abc analysis, eoq model, safety stocks and the reorder point!
Here we pose 10 questions that you should ask to determine how effective your inventory management really is.
Abc inventory management is a technique that’s based on putting products into categories in order of importance, with a being the most valuable and c being the least. Inventory management takes into account other functions such as purchasing, production, and marketing. Traditional approaches to inventory management consider balance between three classes of costs: The goal of inventory management is to minimize the cost of holding inventory by helping business owners know when it’s time to replenish products, or buy more materials to manufacture them.
