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Inventory Management - Coggle Diagram
Inventory Management
Definition
The process of ordering, storing, and using a company's inventory.
These include the management of raw materials, components, and finished products, as well as warehousing and processing such items.
Knowing when to restock certain items, what amounts to purchase or produce, what price to pay, as well as when to sell and at what price.
Major Methods
Just-in-Time (JIT)
Keeping only the inventory they need to produce and sell products. This approach reduces storage and insurance costs, as well as the cost of liquidating or discarding excess inventory.
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Is It Important?
For retail, manufacturing, food service, and other inventory-intensive sectors, it is very important
A large inventory carries the risk of spoilage, theft, damage, or shifts in demand. Inventory must be insured, and if it is not sold in time it may have to be disposed of at clearance prices—or simply destroyed.
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