Can you Profit form Improved Inventory Control?
- Topics:
- Inventory Management
- Source:
- Automotive Service Association
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Overview: Inventory is analogous to money on the shelf. In reality, however, inventory exists to improve your level of service. The right amount of the right part numbers will provide you with what you need when you need it, without enormous stress on your operating capital. There are two methods of inventory control. Last In First Out (LIFO) means that when there is more than one of a given part number, you sell the last one received, first. The rationale being that the newest is probably the most expensive. First In First Out (FIFO) means that when there is more than one of a given part number, you sell the one you've had the longest, first. The first is cost to order, the second is cost-to-keep. The factors involved in cost-to-order are time and money. Time to calculate order quantities and time to do paperwork, time to receive it, stock it, correct errors and then time to track them, and money to pay someone to do it all. Order on a regular basis and purchase only when you need to replenish what has been sold since the last order. Just-in-time inventory means you must have short inventory order cycles and accurate tracking to determine what and how much inventory to stock. Efficient inventory management is an attainable goal with proper planning.
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Format: HTML | Date: Jan 2003 | Pages: 1
