Inventory Systems Comparison
Running head: INVENTORY SYSTEMS
Inventory Systems Summary
Derrick Abrams, Lasonya Jewell-Antoine, Kristin Bachman, Marcia Rhoden-Mccatty
University of Phoenix
QRB 501
August 1, 2011
Inventory Systems Summary
The principal role of inventory management systems is to ensure that stores are adequately stocked. Companies use various methods to track and report inventory. Retail companies are perhaps the best entities to examine when attempting to understand inventory management systems. The type of inventory a company has determines the method they use. Retail companies use the retail inventory method as a base system. Last-in-First-Out (LIFO) and First-in-First-Out (FIFO) are the two systems that appear to be used more frequently. Other systems used are the Just in Time or JIT method and the Average Cost method. The following paragraphs will describe different companies and the type or types of inventory systems they use. Also the advantages and disadvantages of their systems are discussed.
Best Buy CO. Inc.
Best Buy Co. Inc. is a multinational retailer of consumer electronics, appliances, entertainment software, home office products, and related services. The company operates retail stores, calls centers, and conduct online retail operations. Best Buy Co. Inc. uses the retail inventory method as the basis of its inventory management system. This method requires that a record be kept of the total cost and retail value of goods purchased, the total cost and retail value of the goods available for sale, and the sales for the period. There are different versions of the retail inventory method. Specifically, Best Buy Co. Inc. uses the Last-In-First-Out (LIFO) retail method. This method assumes the last unit that comes into inventory is sold first. An advantage of the LIFO method is the ability to pay lower taxes. Using the LIFO method of inventory means that when you count the cost of goods sold, you use the current price rather
Inventory Systems Summary
Derrick Abrams, Lasonya Jewell-Antoine, Kristin Bachman, Marcia Rhoden-Mccatty
University of Phoenix
QRB 501
August 1, 2011
Inventory Systems Summary
The principal role of inventory management systems is to ensure that stores are adequately stocked. Companies use various methods to track and report inventory. Retail companies are perhaps the best entities to examine when attempting to understand inventory management systems. The type of inventory a company has determines the method they use. Retail companies use the retail inventory method as a base system. Last-in-First-Out (LIFO) and First-in-First-Out (FIFO) are the two systems that appear to be used more frequently. Other systems used are the Just in Time or JIT method and the Average Cost method. The following paragraphs will describe different companies and the type or types of inventory systems they use. Also the advantages and disadvantages of their systems are discussed.
Best Buy CO. Inc.
Best Buy Co. Inc. is a multinational retailer of consumer electronics, appliances, entertainment software, home office products, and related services. The company operates retail stores, calls centers, and conduct online retail operations. Best Buy Co. Inc. uses the retail inventory method as the basis of its inventory management system. This method requires that a record be kept of the total cost and retail value of goods purchased, the total cost and retail value of the goods available for sale, and the sales for the period. There are different versions of the retail inventory method. Specifically, Best Buy Co. Inc. uses the Last-In-First-Out (LIFO) retail method. This method assumes the last unit that comes into inventory is sold first. An advantage of the LIFO method is the ability to pay lower taxes. Using the LIFO method of inventory means that when you count the cost of goods sold, you use the current price rather
References: O’Farrell, R. (2011). The Pros vs. Cons for the “Last in, First Out” Inventory Method. The Houston Chronicle www.ehow.com/info_8511215_disadvantages-cost-market-value-inventory.html Retrieved on July 29, 2011 from www.target.com