Essay on Inventory Management And The Objectives Of Good Inventory

Essay on Inventory Management And The Objectives Of Good Inventory

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The first and one of the most important concepts in this case to understand is inventory management and the objectives of good inventory management . Inventory management can be defined as “the practice of overseeing and controlling the quantities of finished products for sale” (“Inventory Management,” n.d.). Thus, in relation to this case, inventory management is the practice of overseeing and controlling the various amounts of food and drinks for sale.
Good inventory management is crucial for the overall success of Wegman’s and every other business entity’s operations. Inventory management is concerned with achieving a high level of customer satisfaction and maintaining inventory costs (Stevenson, 2015, pg. 550). Ultimately, customer satisfaction can be achieved by having “ the right goods, in sufficient quantities, in the right place, at the right time (Stevenson, 2015, pg. 550). This requires proficient understanding and expertise of the company 's supply chain, inbound and outbound logistics, and inventory management systems and constant communication with those working in these areas. Continuously, controlling inventory costs is essential to good inventory management. This assertion is based on the fact that inventory is usually one of the major assets of a business, and “represents a major investment that is tied up” until it is sold (“Inventory Management,” n.d.). With this being said, poor inventory management could be a major cost to a business such as Wegmans. These imposed costs could be caused by missed deliveries, lost sales and customers, and production bottlenecks. Furthermore, an overstocked inventory could result in fixed costs from tied up space and investments (Stevenson, 2015, pg. 550). These results...

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...yield the largest cost management benefits in the near and middle term periods” (“ABC Analysis,” n.d.). Therefore, the implications of this goal devise the reasoning behind why the ABC approach is categorized based on item costs. This method allows the managers to more closely analyze and keep track of the various costs of inventory. Thus, this classification system would greatly benefit a company with large and varying inventory like Wegmans. In order for a business such as Wegmans to implement this particular approach, they must first identify the items of analysis, collect data on these items, sort the inventory into categories, and calculate the various item costs including the accumulated financial impact on the company. After these steps are implemented, Wegmans can then analyze these classes and make appropriate inventory decisions (“ABC Analysis”, n.d.).

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