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Review and Analysis of the Inventory Control System

In: Business and Management

Submitted By martinlyons
Words 1259
Pages 6
Introduction
The objective of this report is to analyze the inventory control system for XXXXX and describe its purpose, critical aspects and objectives. This report will review its faults and challenges, then describe solutions which will produce measurable results.

Purpose of an Inventory Control System
The inventory control system is the mechanism within a company that is used for efficient management of the movement and storage of raw material, work in process, finished goods, effective utilization of people and equipment, and the communication of this information within the organization and its customers. The inventory control system provides the vital information needed for managers to make decisions.

Critical Aspects and Objectives of an Inventory Control System
The main goals of an inventory-control system are distributing product to customers on time and as cost-effectively as possible. With this said, the main objectives of the inventory control system are to avoid back-orders while avoiding excess inventory, provide for the efficient movement of goods, and to maximize profit margins while maintaining sustainable cash flow.

Avoiding back-orders: Back-orders are costly. You want to make sure that the company has sufficient stock on hand to deliver to customers when they want the product. A defined replenishment system is critical to maintain inventory at sufficient levels to meet customer demands. Seeing as it costs time and money to promote products and attract customers, it is important to have inventory on hand when they come to buy.

Avoid Excess Inventory: Carrying too much inventory is costly. Excess inventory ties up working capital, takes up space and employee time, and increases utility costs. In addition, products usually have a shelf life. They become obsolete or out of style, packaging degrades, products oxidize or discolor, or…...

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