ABSTRACT
Inventory managers apply tight personal control to the important few, whilst having effective systems to ensure good results for the rest. A store contains items ranging from main products to cheap items with a stock record for each. To control the resources of the company most effectively, effort and controls should be biased towards high cost areas. The current stock does not necessarily show which items are important for the business. Applying the Pareto principle is a way of balancing inventory, stock availability and critical resource spent on each item. The decision as to which items are in the stock range is an arbitrary one and depends on the particular inventory and marketing policy. High stocks of one item and no stocks of another will reduce overall availability and increase inventory cost. Stock turn is based on historical data and is used for financial reporting.
