Help with business question

timer Asked: Nov 4th, 2015
account_balance_wallet $5

Question Description

Maintaining inventory on shelves and in warehouses can be quite costly. How would you determine the amount of inventory you should have on hand?

Tutor Answer

School: Purdue University

Thank you for the opportunity to help you with your question!

Most retailers think that maximizing sales will lead to flow of non stop revenue. Think of inventory in terms of time. 

Have at hand only enough inventory at a given time to support planned sales, until the next delivery. A retailer should also have a safety stock to cover spike in short term or the possibility will be late on his delivery.

A retailer can have the number of weeks of planned sales going forward that is represented in the current inventory. The advantage of thinking in terms of weeks of supply, it places focus on maximizing inventory returns investment as it linked planned sales to inventory levels 

Please let me know if you need any clarification. I'm always happy to answer your questions.

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