Inventory Management Essay Example | Topics and Well Written Essays - 3500 words

Inventory Management - Essay Example The researcher of this essay states that inventory is a major investment for many companies today. Manufacturing companies can easily be carrying inventory equivalent to between 50% to 70% revenue of the business. It is therefore necessary to reduce the levels of inventory held to the necessary minimum. On the other side if inventory levels are kept too low, the business faces alternative problems like stock outs, high re order cost, setup cost and lost quantity discounts. As it is stated in information that is provided by the company in the essay, that finance team of Wooden Wonders LTD have recently been reviewing that inventory management system for the company and they have decided that FIFO as a recording method would be successful. In addition, the researcher analyzes that the company is focusing on the methods of minimiseing the costs of ordering and holding inventory. Management of Wooden Wonders Ltd stated their aim to control the extra costs attached with inventory manageme nt. As Wooden Wonders’ customers are department stores from across the UK and Europe, Wood Wooden can run its manufacturing cycle in the light of Just In Time approach. For the purpose of minimising the costs of ordering and holding inventory, the company can use any of the methods that were mentioned in the essay and decide which suits with its economic conditions. It is also concluded that care should be taken before choosing any of the alternatives because any wrong step can directly affect the company’s good will.