Successful inventory management involves crating a purchasing plan that will ensure that items are available when they are needed but that neither too much nor too little is purchased and keeping track of existing inventory and its use. Two common inventory management strategies are the just -in-time method, where companies plan to receive items as they are need rather than maintaining high inventory levels, and materials requirement planning, which schedules material deliveries based on sales forecasts.
An inventory valuation allows a company to provide a monetary value for items that make up their inventory. Inventories are usually the largest ...view middle of the document...
The average cost method produces a cost flow based on a weighted average
* Periodic: In the periodic inventory system, sales are recorded as they occur but the inventory is not updated. A physical inventory must be taken at the end of the year to determine the cost of goods
The Universal Product Code (UPC) was adopted by the grocery industry in April 1973 as the standard barcode for all grocers, though it was not introduced at retailing locations until 1974. This helped drive down costs for inventory management because retailers in the United States and Canada didn’t have to purchase multiple barcode readers to scan competing barcodes. There was no one primary barcode for grocers and other retailers to buy one type of reader for.
In the early 1980s, personal computers debuted and started becoming popular. This further pushed down the cost of barcodes and readers. It also allowed the first versions of inventory management software to be put into place. One of the biggest hurdles in selling readers and barcodes to retailers was the fact that they didn’t have a place to store the information they scanned. As computers became more common and affordable, this hurdle was overcome. Once barcodes and inventory management programs started spreading through grocery stores, inventory management by hand became less practical. Writing inventory data by hand on paper was replaced by scanning products and inputting information into a computer by hand.
Starting in the early 2000s, inventory management software progressed to the point where businesspeople no longer needed to input data by hand but could instantly update their database with barcode readers.
1.1.1 Purpose of Inventory Recording and Valuation:
Companies often use inventory management software to reduce their carrying costs. The software is used to track products and parts as they are transported from a vendor to a warehouse, between warehouses, and finally to a retail location or directly to a customer.
Inventory management software is used for a variety of purposes, including:
* Maintaining a balance between too much and too little inventory.
* Tracking inventory as it is transported between locations.
* Receiving items into a warehouse or other location.
* Picking, packing and shipping items from a warehouse.
* Keeping track of product sales and inventory levels.
* Cutting down on product obsolescence and spoilage.
Manufacturers primarily use inventory management software to create work orders and bills of materials. This facilitates the manufacturing process by helping manufacturers efficiently assemble the tools and parts they need to perform specific tasks. For more complex manufacturing jobs, manufacturers can create multilevel work orders and bills of materials, which have a timeline of processes that need to happen in the proper order to build a final product. Other work orders that can be created using inventory management software include reverse work...