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Organization Accomplishment and Inventory Control

There are many factors providing significance to the inventory management and control function. Among the more significant of these factors are the following:

1. It costs money to maintain inventories.

2. It costs money to maintain inadequate inventories.

3. Inventories are subject to obsolesence.

4. Inventories are subject to physical deterioration.

5. Inventories are subject to theft.

6. Inventories are subject to price deterioration.

Inventories often represent a major proportion of an organization's current assets, along with the organization's cash and receivables. The need for effective cash control and the need for effective procedures for monitoring and controlling receivables are recognized by most managers. It is surprising how often these same managers overlook the need for effective procedures and practices for inventory management and control.

Inventory Management and Control Techniques

Inventory levels are, to a great extent, the product of inventory policies, and inventory policies are developed as a part of the overall planning and control process in an organization. There are a number of proven techniques for use in the

effective management and control of inventories. Several of these techniques are explained in the following discussions.

Economic order quantity (EOQ) is a well accepted concept in inventory management and control. EOQ means the deter

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