A small business defined as “independently owned and operated, is organized for profit, and is not dominant in its field” (The US Small Business Administration, 2014). According to The US Small Business Administration (2014), the standard size of a small business in the manufacturing and mining industry is 500 employees at most and $7.5 million in average annual receipts for many nonmanufacturing industries. Owning a business can be an endeavor that offers abundant advantages. The advantages of owning a business are the control of time, the ability to build something, help the community, flexible lifestyle, and no income ceiling (Ward, 2014). Inventory affects multiple sectors within a company mainly operations and production. Because inventory is an essential piece for a small business to prosper, small businesses must integrate inventory planning, a key aspect of supply chain management, to succeed. Inventory planning methods play a critical role in advancing a small business to thrive cost-effectively. Therefore, inventory planning is a crucial part of a small business.
Inventory is important for a small business to succeed. Chalotra (2013) defined inventory management as, “controlling the business stock or controlling the flow of goods and services as per their demand” (p. 213). A small business’s understanding of how services and goods flow from the coordination of order creation, order taking and order fulfillment, will assist in determining supply to fulfill the demand. Therefore, a business owner having the correct stock on hand or in-transit will help a business to supply customers to generate success for the customer and business owner. Inventory management creates efficiency for a small business. Managing inventory by reducing unnecessary inventory increases profitability (Khardekar & Deshmukh, 2012). The reduction of unnecessary stock eliminates the storage of the obsolete item. Physical inventory of...
Please join StudyMode to read the full document