Inventory Management

1. Inventory Management Goals • Prepare a purchasing plan for inventory. • Describe the perpetual and periodic inventory methods. • Determine how much inventory to keep in stock.

2. Terms • perpetual inventory method • stock card • point-of-sale software system • periodic inventory method • stock turnover rate

3. The Marketing Concept and the Product • The wants and needs of customers are the most important consideration when developing any product or marketing effort. • The U.S. market is consumer-driven.

4. Product Mix • product mix • the different products and services a business sells • Entrepreneurs may carry some products that are not profitable because the products provide a convenience for customers.

5. The Small Percentage Often a small percentage of the product selection makes up the majority of sales revenue.

6. Meet Inventory Needs • inventory • the stock of goods a business has for sale • Inventory costs include: • storage • insurance • taxes • purchase price of inventory • Inventory must be well managed if you want to make a profit.

7. Purchasing Plan • The sales forecast can be used to calculate required inventory. • Ending inventory = Beginning inventory + Purchases ─ Sales

8. Chapter 10

9. What are some of the concerns managers have regarding inventory? Chapter 10

10. Track Your Inventory • perpetual inventory method • monitors inventory levels daily • efficient • avoids inventory shortages • stock card • a paper inventory record for a single item • electronic versions available

11. reorder point • the minimum amount you want to keep in inventory • indicates when you should place an order to receive more inventory

13. Use a Computer • point-of-sale software system • updates inventory as each sale happens • provides up-to-date inventory levels

14. Periodic Inventory Method • taking a physical count of merchandise at regular intervals • Take a Physical Inventory • counting and recording actual units • should be done once or twice a year • can highlight discrepancies caused by a failure to record • sales • theft • damage

15. How does the perpetual inventory method differ from the periodic inventory method?

16. Manage Your Inventory • Costs of Carrying Inventory • Costs can increase for many reasons including: • obsolescence • deterioration • interest fees • insurance • storage

17. Costs of Being Out of Stock • Stock shortages can lead to: • loss of sales • loss of customer loyalty • Inventory Turnover Rate • the rate at which inventory is sold and replaced with new inventory Why is this important for you to know?

18. You Task • Complete the Inventory Management Worksheet • Complete the calculations: - Yearly sales (quantity sold  retail price) - ending inventory value (ending inventory  retail price) • Answer the questions • Email Mr. Farrar when you both parts are finished.