September 21st, 2010
Inventory Systems Summary
Inventory systems are used in different companies today as a tool to make sure that the company strives into success. Inventory systems serve several functions for businesses; one purpose is promoting the sales function by ensuring that a sufficient amount of product is available for customers. Another purpose is shrinkage control that is monitoring the frequency of loss, theft, or breakage of products received. Another very important function of inventory control systems is asset valuation; that is establishing the value of the products on the shelf for tax purposes at the end of the tax year. According to the Small Business Administration, all inventory systems strive to strike a balance between managing costs and the business advantages of a broad selection of goods to offer to consumers. All inventory systems, regardless of technology, require some element of visual inventory management. Bar code and stub control systems will all require manual verification periodically. The learning team-A members did research on “Radio frequency identification system,” “Just-in-time production and inventory,” “First in first out,” and “Vendor managed inventory system.” In this paper, team describes each of these systems and provides a comparison to summarize the advantages and disadvantages of these systems. Radio frequency identification inventory system
We are familiar with a barcode system that has been widely used so far for inventory and property identification. This system helps for a fast checkout but has a limitation of sequential data processing. This means that one item is processed at a time. Radio Frequency Identification system is tremendous improvement over barcode because it can identify up to 1000 tagged items per second concurrently via wireless transmission. For example, this system will be able to price all the items in a customer’s cart at once and receipt is generated for customer’s signature within seconds. The RFID system is also very helpful for retailers to ensure that right products are in the right place at the right time. The technology has existed for several generations such as it was used in World War II to identify airplanes; however businesses are picking up to use this as of the present time because of lower costs of the system. Through radio signals, a product tagged with RFID is put in memory until sold. The system can take into account inventory that becomes low and makes the necessary order to replace the product before the shelf is empty. Just-in-time production inventory
The just-in-time (JIT) production and inventory system is designed to keep inventory levels low, prevent waste as well as cut the cost of storage. The just-in-time inventory system is referred to as lean production meaning materials arrive as needed. The JIT system allows one product to leave just as a replacement product is being received. The main focus on JIT is the delivery and production of the exact amount of inventory required at the time the consumers demand the product. The system allows organizations to provide a finished product to consumers quickly reducing purchasing and cost of inventory. The JIT system is effective to eliminate losses from keeping inventory on hand for an extended period as well as preventing any waste of materials. First in first out (FIFO)
FIFO inventory costing method assumes that the items or assets acquired or produced are disposed, sold, or used first. In other words, the product entering first into the inventory is leaving first from inventory. The remaining items in inventory will match with the most recently produced or purchased items (“FIFO,” n.d.). FIFO is used to determine cost of goods sold for a business. Most businesses are always looking for the ways to cut costs, to improve gross profits, and to make up for any lost revenue. FIFO is used to...