Finished Goods Inventory Flashcards, test questions and answers
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What is Finished Goods Inventory?
Finished Goods Inventory is a type of inventory that consists of products that are ready for sale to the consumer. It is the last step in a company’s production process and it usually involves packaging, labeling, and any other processing needed before the product can be sold. Companies keep finished goods inventory in warehouses or stores so they can easily access it when they need to fulfill customer orders.The purpose of keeping finished goods inventory is to have enough stock on hand to meet customer demand without running out. This prevents stockouts, which can lead to lost sales and dissatisfied customers. Holding too much inventory, however, ties up valuable capital that could be used elsewhere. Therefore, many companies use forecasting tools or just-in-time (JIT) production strategies to ensure they maintain an optimal level of finished goods inventory at all times.One way companies track their finished goods inventories is by using barcode scanners or RFID tags attached to each item in the warehouse. This allows them to immediately know when items come into the warehouse and when they go out for delivery. Companies also use software programs such as enterprise resource planning (ERP) systems that help manage their inventories more effectively by tracking how much is in stock at any given time and notifying them when levels reach certain thresholds so they can order more if necessary. Overall, having an effective system for managing Finished Goods Inventory is essential for most businesses as it helps ensure customers receive their orders quickly while also allowing companies to avoid costly overstocking or understocking situations.