ABSTRACT
Inventory constitutes all input materials that go into the product, finished goods, standard spares and work in progress (WIP). Efficient inventory management is critical for containing the cost of inventory holding as well as wastage. Inventories represents largest investment in assets as current asset for manufacturers, wholesalers and retailers. It would be ideal if businesses can operate without any inventory in the system like JIT although it is difficult. Business performance thus gets impacted by inventory management efficiency. Inventory needs to be classified depending on types of inventories and company’s policy and accounting principles for various types of inventories. As inventory has significant cost implications in business operations, manufacturers use various techniques to improve efficiency like cross-docking, direct shipping as well as reducing the bullwhip effect. There are various approaches and methods of replenishing the stocks in the inventory to avoid stock-out situations and also avoid over stocking which businesses must adopt based on the approach and methods that suits them.
