With the inventory representing a very large percentage of assets, how does one

Question

With the inventory representing a very large percentage of assets, how does one control costs?

a.Cost controls can be found through inventory management syste. Improved controls over demand, processes,supply, lead time and cost variances are some components.

b. Keeping the customer satisfied helps keep them loyal, insuring inventory will turn as negoiated.

c. The key to reducing inventory costs is to increasingly involve suppliers and vendors in carryting components for additional periods of time, thus lowering carrying costs.

Explanation / Answer

a.Cost controls can be found through inventory management syste. Improved controls over demand, processes,supply, lead time and cost variances are some components.

Under inventory management the business manages the ordering frequency, quantity storage and use of material in the process of production. Proper management of inventory can reduce costs while its mismangement can lead to higher cost and unnecessary loss to business.

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