What are the objectives of inventory management?

What are the objectives of inventory management?

The main objective of inventory management is to maintain inventory at appropriate level to avoid excessive or shortage of inventory because both the cases are undesirable for business. Thus, management is faced with the following conflicting objectives:

1. To keep inventory at sufficiently high level to perform production and sales activities smoothly.

2. To minimize investment in inventory at minimum level to maximize profitability.

Other objectives of inventory management are explained as under:-

1. To ensure that the supply of raw material & finished goods will remain continuous so that production process is not halted and demands of customers are duly met.

2. To minimize carrying cost of inventory.

3. To keep investment in inventory at optimum level.

4. To reduce the losses of theft, obsolescence & wastage etc.

5. To make arrangement for sale of slow moving items.

6. To minimize inventory ordering costs.
What are the consequences of over investment & under investment in inventory?
Both over investment and under investment in inventory is undesirable as both have consequences…
Explain: ABC analysis and it advantages.
A.B.C. analysis is an analytical technique of controlling different items of inventory. …
What can a company do with the profits it earns?
Company earns profits and that money is put for the following use:-…
Post your comment