Objectives of inventory management, Financial Accounting

Assignment Help:

The twin objectives of inventory management are financial and operational. The operational objective implies that the materials and spares would be obtainable in sufficient quantity on time hence work is not disrupted for want of inventory. The financial objective implies that investment in inventories must not keep idle and minimum amount of capital must be locked in inventories. The objectives of inventory management are summarized as given below:

Operating Objectives

1) To make sure continuous provides of materials

2) To make sure uninterrupted production

3) To minimize risks and losses

4) To make sure better customer service

5) To ignoring stock out danger.

Financial Objectives

1) To minimize investment

2) To minimize inventory related costs and

3) To ensure economy in purchasing

Factors Affecting Level of Inventory

As stated in the previous sections the firm must remain its inventory at reasonable level. The quantum of inventory based upon several factors, several of the important factors are as given here:

a. Financial Position

b. Nature and Type of Product

c. Market Structure

d. Nature of Business

e. Attitude of Management

f.  Inventory Costs

g. Inventory Turnover

h. Economies of Production

i. Period of Operating Cycle


Related Discussions:- Objectives of inventory management

What is the npv of project - cost of capital, 1. Kinetics is considering a ...

1. Kinetics is considering a project that has a NINV of $874,000 and generates net cash flows of $170,000 per year for 12 years. What is the NPV of this project if Kinetics' cost o

What is the break-even sales, If fixed costs are $259,238, the unit selling...

If fixed costs are $259,238, the unit selling price is $112, and the unit variable costs are $63, what is the break-even sales (units)?

Determine out the future value, Determine out the future value of Rs.1000 c...

Determine out the future value of Rs.1000 compounded yearly for 10 years at an interest rate of 10 percent. Solution: The future value 10 years thus would be FV = PV (1+k)

Calculate the financial ratios, Part I: Wal-Mart Stores Inc.'s income stat...

Part I: Wal-Mart Stores Inc.'s income statement and balance sheet are attached. Gather relevant information from the financial statements to calculate the financial ratios, and co

Calculate free cash flow to equity, (a)  In order to obtain free cash flow...

(a)  In order to obtain free cash flow to equity (FCFE), the two adjustments that Shaar must make to cash flow from operations (CFO) are  i.   CFO does not consider the inves

Treatment of cash flow - gaap & fasb, The appropriate treatment of Cash flo...

The appropriate treatment of Cash flow in respect of the following items as per US GAAP & FASB - (230-10)  1. Receipt of Insurance settlement proceeds of $2 mill. From an intern

The paper Contemporary Issues in International Accounting, Requirements: P...

Requirements: Part I Access the IFRS and the Generally Accepted Accounting Principles (GAAP) of your country. a. Note ten differences between the two sets of GAAP. Part II Ac

Prepare a statement of cash flows, The comparative balance sheet of Portabl...

The comparative balance sheet of Portable Luggage Company at December 31, 2008 and 2007, is as follows An examination of the income statement and the accounting records revealed th

Calculate the book value of share, Thurston Howell IV is the sole heir to t...

Thurston Howell IV is the sole heir to the Howell Enterprise fortune. He does not participate in the business, preferring to tend to his comic book collection. He does however own

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd