WHAT IS INVENTORY Inventory is a stock or store of goods or services kept for use or sale in the future There are four types of inventory Raw materials purchased parts Partially completed goods called work in progress WIP Finishedgoods inventories Goodsintransit to warehouses or customers GIT The motive for inventory there are three motives for holding inventory similar to cash Transaction motive Economies of scale is achieved when the number of setups are reduced or the number of transactions are minimized Precautionary motive hedge against uncertainty including demand uncertainty supply uncertainty Speculative motive hedge against price increases in materials or labor WHAT IS INVENTORY MANAGEMENT The objective of inventory is to achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds Level of
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