Using Seasonal Indices to Analyze Inventory Data

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Running Head: Summer and Winter Inventory Systems

SUMMER AND WINTER INVENTORY SYSTEMS

Grant H. Yarbrough, Darnetta Brown, Joel Jones, Zehra Ozezer, Angela Young

QRB/501

March 6, 2011

Jeffrey Greene

Running Head: Summer and Winter Inventory Systems

Inventory systems are the methods by which businesses keep track of their stocks, goods, and services. Through these systems, managers are able to determine shortages in their goods and put in orders to replace those that have been sold, finished from the shelves, or sold out.

Physical or Periodic Method

“A period will be defined as the time interval between consecutive stock reviews. The beginning of the period is the instant after the decision to order a batch or not to order has been made. The end of the period is the instant of stocktaking, just before the decision”(Article: Management Science, Vol. 10,No.1 1963). Before the introduction of technology into accounting procedures, physical or periodic method was the primary means of tracking and taking inventory. The method is called physical because it implies just that. Inventory counting must be done by means of walking down the aisles of a store with a calculator, a list of items to be checked, then counting and recording what is seen. According to Charles Atkinson, “If you want to know your inventory level, you better take off your shoes so you can count on your toes when your fingers run out”(UOP Library Website: Inventory management review.org, 2005). This system is generally used by small stores and businesses that carry minimal inventories. The process involves counting and updating inventory periodically. For example, some companies like Footlocker and privately owned shoes stores do theirs on a semiannual or annual basis. At the end of the year, the manager will take stock of all the purchases that were made during the year and add the total to the prior year’s ending inventory to determine the total...
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