The Inventory System

Topics: Inventory, Manufacturing, Manufacturing resource planning Pages: 4 (1413 words) Published: October 9, 2012
Chapter II

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Inventory is one of the most important in monitoring a stock that take place in business activity. The inventory system does the entire task in computing the value with inventory (cost and quality) and handling data or information. Inventory System maintains an orderly flow of supplies, raw materials, or finished goods through an office shop/factory because of items in any inventory. Represents cost, they need to be controlled. The purpose of inventory system for management are to keep inventory levels and cost at desire minimums while maintaining to proper safeguards over materials to places and people who need them. Inventory review refers to the time interval between counting inventories. Periodic review systems have a set schedule for conducting an inventory count. Transactional review systems update the inventory count after each transaction. Periodic review is less resource intensive but more prone to creating shortages and inventory discrepancies while transactional review is more accurate but requires more resources. Inventory costs can be broken into several categories: the actual cost of the inventoried product, the cost of storage and the cost of unmet demand if inventory is not available to fill orders. Additional costs include transportation and ordering costs incurred when replenishing inventory. Each of these costs is unique to individual businesses and can vary widely. (Warren R. Planret, 2002)

Inventory means goods and materials, or those goods and materials themselves, held available in stock by a business. This word is also used for a list of the contents of a household and for a list for testamentary purposes of the possessions of someone who has died. In accounting, inventory is considered an asset. Inventory proportionality is the goal of demand-driven inventory management. The primary optimal outcome is to have the same number of days' (or hours', etc.) worth...
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