Work At Home - Family

Work at Home, stay home to be with your love ones, your family.

Earn extra money legitimate by starting your own
Internet Home Business.

Get Paid For Your Opinion
Wow! Participate in online surveys from the comfort
of your own home and get paid.
Earn between $10.00 to $125.00 per hour!
Earn Money Online - Click Here

Home

Strong Future International Marketing Group

Home Business Articles

Work At Home Home Business Resources

Fun Stuff

New York Business

Home Business Links:-
 Work At Home Partners Link 1

Work At Home Link  1

Home Business Link 1

Earn Money Link 1

Internet Biz Links 1

Others...Link 1
 

SECTION 2
Title 1
Title 2
Title 3
Title 4

SECTION 3
Title 1
Title 2
Title 3
Title 4
Title 5

SECTION 4
Title 1
Title 2
Title 3
Title 4
Title 5
Title 6

The best Home Business idea to earn extra money from your home!
Legitimate, computer based, all Internet, free to join!
 Click Here To Get Started Now!

Click Here for more info

 

INVENTORY MANAGEMENT


 By:   Floyd D. Hedrick
         Library of Congress, Washington, D.C.


       Frank C. Barnes, P.E., Ph.D.
          University of North Carolina at Charlotte
       
       Edward W. Davis
          University of Virginia, Charlottesville


       D. Clay Whybark
          Indiana University, Bloomington


Editor:   Jeannette Budding, Communications Manager
          National Association of Purchasing Management


  


This publication is a merger of former SBA publications, 
"Purchasing for Owners of Small Plants," 
"Buying for Retail Stores" and "Inventory Management." 


While we consider the contents of this publication to be 
of general merit its sponsorship by the U.S. 
Small Business Administration does not necessarily 
constitute an endorsement of the views and opinions of 
the authors or the products or services of the companies 
with which they are affiliated.


All SBA programs are provided to the public on a 
non-discriminatory basis.


INTRODUCTION


"Inventory" to many small business owners is one of the 
more visible and tangible aspects of doing business.  
Raw materials, goods in process and finished goods all 
represent various forms of inventory. Each type represents 
money tied up until the inventory leaves the company as 
purchased products.  Likewise, merchandise stocks in a
retail store contribute to profits only when their sale 
puts money into the cash register.


In a literal sense, inventory refers to stocks of anything 
necessary to do business.  These stocks represent a large 
portion of the business investment and must be well managed 
in order to maximize profits. In fact, many small businesses 
cannot absorb the types of losses arising from poor 
inventory management.  Unless inventories are 
controlled, they are unreliable, inefficient and costly.


SUCCESSFUL INVENTORY MANAGEMENT


Successful inventory management involves balancing the costs 
of inventory with the benefits of inventory.  Many small 
business owners fail to appreciate fully the true costs 
of carrying inventory, which include not only direct costs 
of storage, insurance and taxes, but also the cost of money 
tied up in inventory.  This fine line between keeping too 
much inventory and not enough is not the manager's only concern.  
Others include: 



    * Maintaining a wide assortment of stock--but not spreading 
      the rapidly moving ones too thin;


    * Increasing inventory turnover--but not sacrificing the 
      service level;


    * Keeping stock low--but not sacrificing service or performance.


    * Obtaining lower prices by making volume purchases--but 
      not ending up with slow-moving inventory; and      


    * Having an adequate inventory on hand--but not getting 
      caught with obsolete items.


 
The degree of success in addressing these concerns is easier 
to gauge for some than for others.  For example, computing 
the inventory turnover ratio is a simple measure of managerial 
performance.  This value gives a tough guideline by which 
managers can set goals and evaluate performance,but it must 
be realized that the turnover rate varies with the function of
inventory, the type of business and how the ratio is calculated 
(whether on sales or cost of goods sold).  
Average inventory turnover ratios for individual industries 
can be obtained from trade associations. 

THE PURCHASING PLAN 

One of the most important aspects of inventory control is to 
have the items in stock at the moment they are needed.  
This includes going into the market to buy the goods early 
enough to ensure delivery at the proper time.  
Thus, buying requires advance planning to determine inventory 
needs for each time period and then making the commitments 
without procrastination. 

For retailers, planning ahead is very crucial.  Since they 
offer new items for sale months before the actual calendar 
date for the beginning of the new season, it is imperative 
that buying plans be formulated early enough to allow for 
intelligent buying without any last minute panic purchases.
The main reason for this early offering for sale of new items 
is that the retailer regards the calendar date for the beginning 
of the new season as the merchandise date for the end of the 
old season.  For example, many retailers view March 21 as the 
end of the spring season, June 21 as the end of summer and 
December 21 as the end of winter. 

Part of your purchasing plan must include accounting for the 
depletion of the inventory.  Before a decision can be made as 
to the level of inventory to order, you must determine how 
long the inventory you have in stock will last.   
For instance, a retail firm must formulate a plan to ensure
the sale of the greatest number of units.  Likewise, a 
manufacturing business must formulate a plan to ensure enough 
inventory is on hand for production of a finished product. 

In summary, the purchasing plan details: 

   * When commitments should be placed;
   * When the first delivery should be received;
   * When the inventory should be peaked;
   * When reorders should no longer be placed; and
   * When the item should no longer be in stock. 

Well planned purchases affect the price, delivery and availability of
products for sale. 

CONTROLLING YOUR INVENTORY 

To maintain an in-stock position of wanted items and to dispose 
of unwanted items, it is necessary to establish adequate controls 
over inventory on order and inventory in stock.  There are several 
proven methods for inventory control.  They are listed below, 
from simplest to most complex. 

   * Visual control enables the manager to examine the inventory visually
     to determine if additional inventory is required.  In very small
     businesses where this method is used, records may not be needed at
     all or only for slow moving or expensive items.


   * Tickler control enables the manager to physically count a small
     portion of the inventory each day so that each segment of the
     inventory is counted every so many days on a regular basis.


   * Click sheet control enables the manager to record the item as it
     is used on a sheet of paper.  Such information is then used for
     reorder purposes.


   * Stub Control (used by retailers) enables the manager to retain a
     portion of the price ticket when the item is sold.  The manager can
     then use the stub to record the item that was sold. 

As a business grows, it may find a need for a more sophisticated and
technical form of inventory control.  Today, the use of computer 
systems to control inventory is far more feasible for small business 
than ever before, both through the widespread existence of computer 
service organizations and the decreasing cost of small-sized computers.  
Often the justification for such a computer-based system is 
enhanced by the fact that company accounting and billing procedures 
can also be handled on the computer.  



    * Point-of-sale terminals relay information on each item used or sold.
     The manager receives information printouts at regular intervals for
     review and action.


   * Off-line point-of-sale terminals relay information directly to the
     supplier's computer who uses the information to ship additional
     items automatically to the buyer/inventory manager. 



The final method for inventory control is done by an outside agency.  
A manufacturer's representative visits the large retailer on a 
scheduled basis, takes the stock count and writes the reorder.  
Unwanted merchandise is removed from stock and returned to the 
manufacturer through a predetermined, authorized procedure. 



A principal goal for many of the methods described above is to 
determine the minimum possible annual cost of ordering and 
stocking each item.  Two major control values are used: 
1) the order quantity, that is, the size and frequency of orders; and 
2) the reorder point, that is, the minimum stock level at which 
additional quantities are ordered.  The Economic Order Quantity (EOQ) 
formula is one widely used method of computing the minimum annual 
cost for ordering and stocking each item.  The EOQ computation takes
into account the cost of placing an order, the annual sales rate, 
the unit cost, and the cost of carrying inventory.  
Many books on management practices describe the EOQ model in detail.


DEVELOPMENTS IN INVENTORY MANAGEMENT 



In recent years, two approaches have had a major impact on 
inventory management: Material Requirements Planning (MRP) 
and Just-In-Time (JIT and Kanban).  Their application is 
primarily within manufacturing but suppliers might find new 
requirements placed on them and sometimes buyers of 
manufactured items will experience a difference in delivery. 



Material Requirements Planning is basically an information 
system in which sales are converted directly into loads on 
the facility by sub-unit and time period.  Materials are 
scheduled more closely, thereby reducing inventories, 
and delivery times become shorter and more predictable.  
Its primary use is with products composed of many components.  
MRP systems are practical for smaller firms.  The computer 
system is only one part of the total project which is usually 
long-term, taking one to three years to develop. 



Just-In-Time inventory management is an approach which works 
to eliminate inventories rather than optimize them.  
The inventory of raw materials and work-in-process falls to 
that needed in a single day.  This is accomplished by reducing 
set-up times and lead times so that small lots may be ordered.
Suppliers may have to make several deliveries a day or move 
close to the user plants to support this plan. 



TIPS FOR BETTER INVENTORY MANAGEMENT 



What to do at time of delivery: 



   * Verify count--Make sure you are receiving as many cartons as are
     listed on the delivery receipt.


   * Carefully examine each carton for visible damage--If damage is
     visible, note it on the delivery receipt and have the driver sign
     your copy.


   * After delivery, immediately open all cartons and inspect for
     merchandise damage. 



Steps to take when damage is discovered: 



   * Retain damaged items--All damaged materials must be held at the
     point received.


   * Call carrier to report damage and request inspection.
   * Confirm call in writing--This is not mandatory but it is one way
     to protect yourself. 



Steps to take when carrier makes inspection of damaged items: 



   * Have all damaged items in the receiving area--Make certain the
     damaged items have not moved from the receiving area prior to
     inspection by carrier.


   * After carrier/inspector prepares damage report, carefully read
     before signing. 



Steps to be taken after inspection has been made: 



   * Retain damaged materials--Damaged materials should not be used or
     disposed of without permission by the carrier.


   * Do not return damaged items to shipper without written authorization
     from shipper/supplier. 



SPECIAL TIPS FOR MANUFACTURERS.


If you are in the business of bidding, specifications play a 
very important role.  In writing specifications, the following 
elements should be considered. 



   * Do not request features or quality that are not necessary for the
     items' intended use.


   * Include full descriptions of any testing to be performed.
   * Include procedures for adding optional items.


   * Describe the quality of the items in clear terms. 



The following actions can help save money when you are stocking inventory: 



   * Substitution of less costly materials without impairing required
     quality;


   * Improvement in quality or changes in specifications that would lead
     to savings in process time or other operating savings;


   * Developing new sources of supply;


   * Greater use of bulk shipments;


   * Quantity savings due to large volume, through consideration of
     economic order quantity;


   * A reduction in unit prices due to negotiations;


   * Initiating make-or-buy studies;


   * Application of new purchasing techniques;


   * Using competition along with price, service and delivery when
     making the purchase selection decision. 



                                     *    *    *


APPENDIX: Information Resources 



U.S. Small Business Administration (SBA) 



The SBA offers an extensive selection of information on most
business management topics, from how to start a business to
exporting your products. 



This information is listed in "The Small Business Directory". For


a free copy contact your nearest SBA office. 



SBA has offices throughout the country. Consult the U.S.


Government section in your telephone directory for the office


nearest you. SBA offers a number of programs and services,


including training and educational programs, counseling services,


financial programs and contract assistance. Ask about 



 - Service Corps of Retired Executives (SCORE), a national


   organization sponsored by SBA of over 13,000 volunteer business


   executives who provide free counseling, workshops and seminars


   to prospective and existing small business people. 



 - Small Business Development Centers (SBDCs), sponsored by the SBA


   in partnership with state and local governments, the educational


   community and the private sector. They provide assistance,


   counseling and training to prospective and existing business


   people. 



 - Small Business Institutes (SBIs), organized through SBA on more


   than 500 college campuses nationwide. The institutes provide


   counseling by students and faculty to small business clients.   


For more information about SBA business development programs and


services call the SBA Small Business Answer Desk at 1-800-8-ASK-SBA


(827-5722). 



 Other U.S. Government Resources.


Many publications on business management and other related topics


are available from the Government Printing Office (GPO). GPO


bookstores are located in 24 major cities and are listed in the


Yellow Pages under the "bookstore" heading. You can request a


"Subject Bibliography" by writing to Government Printing Office,


Superintendent of Documents, Washington, DC 20402-9328. 



 


Many federal agencies offer publications of interest to small
businesses. There is a nominal fee for some, but most are free.
Below is a selected list of government agencies that provide
publications and other services targeted to small businesses. 
To get their publications, contact the regional offices listed 
in the telephone directory or write to the addresses below: 



 - Consumer Information Center (CIC), P.O. Box 100 Pueblo, CO 81002


   The CIC offers a consumer information catalog of federal


   publications. 



 - Consumer Product Safety Commission (CPSC)


   Publications Request


   Washington, DC 20207


   The CPSC offers guidelines for product safety requirements. 



 - U.S. Department of Agriculture (USDA)


   12th Street and Independence Avenue, SW


   Washington, DC 20250


   The USDA offers publications on selling to the USDA. 


   Publications and programs on entrepreneurship are also available


   through county extension offices nationwide. 



 - U.S. Department of Commerce (DOC)


   Office of Business Liaison


   14th Street and Constitution Avenue, NW


   Room 5898C


   Washington, DC 20230


   DOC's Business Assistance Center provides listings of


   business opportunities available in the federal government. This


   service also will refer businesses to different programs and


   services in the DOC and other federal agencies. 



 - U.S. Department of Health and Human Services (HHS)


   Public Health Service


   Alcohol, Drug Abuse and Mental Health Administration


   5600 Fishers Lane


   Rockville, MD 20857


   Drug Free Workplace Helpline: 1-800-843-4971. Provides 


   information on Employee Assistance Programs.


   National Institute for Drug Abuse Hotline:


   1-800-662-4357. Provides information on preventing substance


   abuse in the workplace.


   The National Clearinghouse for Alcohol and Drug Information:


   1-800-729-6686 toll-free. Provides pamphlets and resource


   materials on substance abuse.


 - U.S. Department of Labor (DOL)


   Employment Standards Administration 


   200 Constitution Avenue, NW 


   Washington, DC 20210 


   The DOL offers publications on compliance with labor laws.


  - U.S. Department of Treasury 


   Internal Revenue Service (IRS)


   P.O. Box 25866 


   Richmond, VA 23260 


   1-800-424-3676 


   The IRS offers information on tax requirements for small


   businesses. 



 - U.S. Environmental Protection Agency (EPA)


   Small Business Ombudsman 


   401 M Street, SW (A-149C)


   Washington, DC 20460 


   1-800-368-5888 except DC and VA 


   703-557-1938 in DC and VA 


   The EPA offers more than 100 publications designed to help small


   businesses understand how they can comply with EPA regulations. 



 - U.S. Food and Drug Administration (FDA)


   FDA Center for Food Safety and Applied Nutrition 


   200 Charles Street, SW 


   Washington, DC 20402 


   The FDA offers information on packaging and labeling 


   requirements for food and food-related products. 



For More Information.


A librarian can help you locate the specific information 
you need in reference books. Most libraries have a variety 
of directories, indexes and encyclopedias that cover many 
business topics. They also have other resources, such as 



 - Trade association information.


   Ask the librarian to show you a directory of trade associations.


   Associations provide a valuable network of resources to their 


   members through publications and services such as newsletters,


   conferences and seminars. 



  - Books.


   Many guidebooks, textbooks and manuals on small business are 


   published annually. To find the names of books not in your local 


   library check "Books In Print", a directory of books currently 


   available from publishers. 



 - Magazine and newspaper articles.


   Business and professional magazines provide information that is 


   more current than that found in books and textbooks. There are 


   a number of indexes to help you find specific articles in 


   periodicals. 



 


In addition to books and magazines, many libraries offer free 


workshops, lend skill-building tapes and have catalogues and 


brochures describing continuing education opportunities.



I am giving away this ebook to all my visitors.

"7 Power Steps to Making Money on the Internet"

Click HERE to download

 

Get Paid For Your Opinion
Wow! Participate in online surveys from the comfort of your own home and get paid.
Earn between $10.00 to $125.00 per hour!
Earn Money Online - Click Here

 

Have Questions? Contact me HERE

 


        

 

 

 


 


Get Paid For Your Opinion
Wow! Participate in online surveys from the comfort of your own home and get paid.
Earn between $10.00 to $125.00 per hour!
Earn Money Online - Click Here


Title Goes Here
Ut wisi enim ad minim veniam, quis nostrud exerci taion


Title Goes Here
Ut wisi enim ad minim veniam, quis nostrud exerci taion