The Importance of Inventory Control
Inventory is defined as any stored resource that is used to satisfy a current or future need (Render, Stair & Hanna, 2012). Many things come to make up inventory a few examples of what make up inventory are finished goods, raw materials, and work-in-progress. When it comes to a company’s most important and often times most expensive assets you discover inventory makes up as much as 50% of a company’s total invested capital (Render, Stair & Hanna, 2012). This paper will take a look at the importance of inventory control and some inventory control models and the importance they play in the success and or failure of a company. Inventory is important in the day to day operations of every major business and many non business organizations like government. Nearly all organizations have some type of control system or inventory planning method. You may ask why is inventory control so important, this is because “The principal goal of inventory managing is always to strike a balance amongst the contending specifications for attaining ideal inventory ranges” (“The importance of," ). Many different entities in society use inventory control these organizations can range from schools, nearly every type of business, and even state and federal governments. Taking a look at how organizations control inventory is equal to investigating how organizations achieve objectives by supplying services and goods to customers. “Inventory is the common thread that ties all the functions and departments” of a company together (Render, Stair & Hanna, 2012). Inventory control and planning can really be broken down in to four areas: planning on what inventory to stock and acquire, forecasting parts/product demand, controlling inventory levels and feed measurements to revise plans and forecasts. Looking at inventory control and the planning system is essential when it comes to inventory control. Without control it would be impossible to maintain efficient levels of inventory
Cited: Render, B., Stair, R., & Hanna, M. (2012). Quantitative analysis for management. (11th Edition ed.). Saddle River New Jersey: Prentice Hall. The importance of inventory management. (n.d.). Retrieved from http://businessownersdaily.com/the-importance-of-inventory-management.htm