Help with business question

User Generated

avan41

Business Finance

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?

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Explanation & Answer

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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 


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Anonymous
Just the thing I needed, saved me a lot of time.

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