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

Economic substance, economic substance as in recognition of revenue

economic substance as in recognition of revenue

Discounted cash flow and terminal growth rate, Answer the following questi...

Answer the following questions relating to Discounted Cash Flow (DCF) projections and valuations. (a)    Michael Hudson asks a rhetorical question (tongue in cheek): "What's not

Effects of the appointment of the receiver-bankruptcy, Effects of the appoi...

Effects of the appointment of the receiver Floating charges: these crystallise on the appointment of a receiver and become fixed on the assets then in the hands of the compan

Identify total proceeds from new securitizations, Refer to Note 8, Securiti...

Refer to Note 8, Securitization Transactions (pp. 78-80) and an extract from Note 2, Additional Balance Sheet and Cash Flow Information (p. 72-73) from the Consolidated Financial S

Investment tax credit, Investment Tax Credit - This is a component of gener...

Investment Tax Credit - This is a component of general business credit and comprises the following: 1. Energy credit 2. Rehabilitation credit 3. Reforestation credit

Find market and alpha and beta values, a. Find five comparables for Bank of...

a. Find five comparables for Bank of America (BAC) b. Find the CEO of BAC and five comparable companies, For BAC and all firms, find: c. Market value, alpha and beta (pric

Factoring and invoice discounting, The cash flow as well as other benefits ...

The cash flow as well as other benefits of factoring was discussed earlier. Invoice discounting as well offers cash flow advantages. Here selected invoices of superior quality are

Minority interest-group accounts, Minority interest (MI) When the holding...

Minority interest (MI) When the holding company owns less than 100% of the ordinary share capital of the subsidiary company then the other balance is held by minority interest. T

Determine the net worth of personal assets, Igor and Angela were married in...

Igor and Angela were married in 2005, separated in 2011, and divorced recently. At the time of marriage, each had some investments and personal assets. They both worked during the

Identify the various prices for job, Identify the various prices for job ...

Identify the various prices for job To identify the various prices for job, there are numerous points to be considered, including: ?How many garages shall we visit? ?What

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