Inventory Management Flashcards, test questions and answers

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What is Inventory Management?

Inventory management is the process of ordering, storing and using a company’s inventory or stock. It can involve a range of activities, such as tracking stock levels, reordering stock, transferring inventory between locations and managing supplier relationships. Inventory management also includes making decisions about the type and quantity of products to be kept in stock.Good inventory management is essential for businesses that rely on having the right amount and type of product on hand to meet customer demand. Poorly managed inventory can lead to lost sales due to unavailability of goods or outdated products. It can also result in excess storage costs due to overstocking or excessive wastage from expired items.The main objectives of inventory management are to ensure availability of goods when needed, maintain accuracy in order fulfillment and reduce holding costs. To achieve these goals, businesses must use effective strategies for controlling their inventory levels by determining when and how much to order as well as where items should be stored for easy access when required. This requires careful planning and an understanding of customer demand patterns as well as supplier lead times.Some common tools used in inventory management include barcode scanning systems, computerized point-of-sale systems (POS) or enterprise resource planning (ERP) software programs which provide real-time data on stock levels at any given time. These tools allow companies to keep accurate records on their inventories which helps them adjust orders accordingly based on customer trends or supplier delays so that no item runs out before it is replenished again. Additionally, many companies also employ forecasting techniques based on historical data collected from past sales records which help determine future demand patterns more accurately which further improves efficiency in managing inventories better over time leading to cost savings & higher profits overall.