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Inventory Management

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INVENTORY MANAGEMENT AND CONTROL*
INVENTORY MANAGEMENT AND CONTROL concerns most managers of agricultural marketing and supply businesses, whether they are retail, wholesale, or service oriented. The value of a manager to an agricultural marketing and supply business depends on his ability to manage inventories effectively. The total cost of maintaining the desired inventory level must be held down to a reasonable figure, but the inventory must also be large enough to permit the company to effectively merchandise the products and services it sells. If the manager doesn't control his inventories to accomplish both of these objectives, the business may not be able to prosper or even to survive against competition. The information in this circular suggests to the manager ways on how best to do four things: Y How to control inventories. Y How to visualize the inventory costs to be included in determining how much inventories are costing the company. Y How to determine the level of inventory that is most profitable.
*

Y How to determine how much to order and how often to order.

Controlling Inventories
Purchase systematically. Place orders for materials long enough beforehand so there will not be a shortage between ordering and delivery. Let the inventory become relatively low before reordering but keep enough on hand to meet current needs. There are costs associated with keeping large inventories. Likewise, there are costs if you deplete your stock. Don't hold “dead” lines or items. Keep track of inventories. When stock is received, be sure that what was ordered was delivered. Make sure that the amount received is added to the inventory. Physical inventories should be taken frequently to find out which items are not selling so you can discontinue them as quickly as possible, to spot shortages in merchandise that may be due to theft, to note deterioration that may...

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