ABSTRACT
Inventory is an expensive asset and must be carefully managed and controlled. Inventory-management is the supervision of the non-capitalized assets and stock items. Inventory is often categorized based on its flow through the production cycle, i.e., raw materials, work-in-process, and finished goods. The cost to hold inventory has been a debatable point since the inception of inventory-management, as accounting departments’ approaches to inventory costs vary greatly across companies. Inventory turns has always been a major measuring stick for determining how effective a company is at managing its inventory. Inventory turns is a measure of how quickly materials are moving through a facility or through an end-to-end supply chain and is calculated by dividing some measure of the cost of goods by the amount of inventory on hand. Many companies are initiating Lean inventory-management techniques to assist in increasing flexibility and/or responsiveness to customers’ fluctuating demand, to lower operating expenses, and to improve overall supply-chain performance.
