The issue of inventory management is part of flow control and the accumulation of intermediate goods in the distribution process. Manage inventory means to have a target two, whose faces are placed in contradiction: on the one hand, research on minimizing the cost of maintaining a stock of materials, one should ensure at the same time the necessary regular operation in the distribution chain .
A low stock will pay a lower cost, but also possible irregularities in delivery of goods along the supply chain, conversely, a high stock will pay a higher cost of maintenance but also a reduction of the discontinuity across the logistics process from the goods.
This is because the costs and benefits of holding stocks are as follows.
costs
Financial cost: buy stocks means "freeze" the money in the lives of materials which can be converted into money only when the market requires them: therefore there is a possible "loss of earnings" arising from non-usability of alternative liquid assets invested in stocks, and even there may be an indebtedness for the payment of suppliers, which generates interest persons.
Operating cost: The higher the amount of material held in stock, the better the infrastructure necessary to manage the Buffer Stock: storage facilities, installations and means of handling the daily management of materials. Moreover, in case of over-saturation of the physical stores, the excess material is transformed in additional operating costs due to the continuous movement of materials for handling daily, and increased potential for errors.
Benefits
Availability of goods: high stock levels ensure the availability of goods for sale to customers, a factor crucial in many areas (typically the case for the retail channel, where the difference between a dealer and the other often lies in the availability of funds). Large stocks have also "hides" the smooth running of the supply chain, logistics, market-making perceive smooth and without jolts.
Lower cost of purchase: buy large lots of goods typically guarantees a unit purchase price lower. For this reason we shall often so-called speculative buying, where the quantity (and the purchase price) do not meet criteria for logistics, but a commercial basis.
will be back soon to talk about stocks.
Good Logistics!
A low stock will pay a lower cost, but also possible irregularities in delivery of goods along the supply chain, conversely, a high stock will pay a higher cost of maintenance but also a reduction of the discontinuity across the logistics process from the goods.
This is because the costs and benefits of holding stocks are as follows.
costs
Financial cost: buy stocks means "freeze" the money in the lives of materials which can be converted into money only when the market requires them: therefore there is a possible "loss of earnings" arising from non-usability of alternative liquid assets invested in stocks, and even there may be an indebtedness for the payment of suppliers, which generates interest persons.
Operating cost: The higher the amount of material held in stock, the better the infrastructure necessary to manage the Buffer Stock: storage facilities, installations and means of handling the daily management of materials. Moreover, in case of over-saturation of the physical stores, the excess material is transformed in additional operating costs due to the continuous movement of materials for handling daily, and increased potential for errors.
Benefits
Availability of goods: high stock levels ensure the availability of goods for sale to customers, a factor crucial in many areas (typically the case for the retail channel, where the difference between a dealer and the other often lies in the availability of funds). Large stocks have also "hides" the smooth running of the supply chain, logistics, market-making perceive smooth and without jolts.
Lower cost of purchase: buy large lots of goods typically guarantees a unit purchase price lower. For this reason we shall often so-called speculative buying, where the quantity (and the purchase price) do not meet criteria for logistics, but a commercial basis.
will be back soon to talk about stocks.
Good Logistics!
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