A merchandiser such as Express women and men’s clothing store must manage inventory to assure that the cost of goods sold is being managed for optimal net income. The process of inventory counting is computerized however; a manual count of inventory is needed to validate the accuracy of the computerized data. An example, when you are looking for a size that is not on the floor display, the clerk may look in the system to see if they have others in stock, if the system is not showing the item, they always go back and check the inventory that has not been displayed. In today’s technological society one would think this isn’t necessary, but information into the system is only as good as the person entering it. Many things can occur to throw off inventory such as damaged goods but likelihood of theft is the major reason.
Retail stores such as express can manage inventory through a perpetual process counting each transaction for a real time inventory review each day, and through a periodic review strategy, which updates inventories during an accounting cycle. It would seem logical and necessary for retailers to do this daily in real time and in a dedicated accounting cycle particularly due to the high risk of theft.
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...old, highly used in grocery stores or other perishable item industry. Last option is last in first out; most recent items sold first. During inflationary periods, it is beneficial for companies to be using the FIFO method as first items sold are the least expensive, decreasing cost and improving profits. Using the LIFO method has the reverse affect but a company pays less in taxes. Companies are required to disclose methods utilized.
Inventory management and expenses associated with buying and selling the products are key elements to any merchandiser. Too much inventory directly affects a company’s cash statement. The key is assuring that inventory has a high turnover ratio for the best outcome. Monitoring the slower moving inventory for a focus on sales and marketing of the product or determining to discontinue the product is also very important.
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