Inventory Management System

Abstract

The importance of inventory system for the management of the inventory of any business or an organization is crucial to the bottom line of that business. This paper provides a detailed analysis of inventory management system along with the associated costs, benefits and types of inventory management system. Also, inventory accounting methods FIFO and LIFO are briefly discussed. The project of designing an inventory management system is proposed for the Mexican Tourism Board in order to increase the effectiveness in the usage of promotional material and a brief comparison with other inventory management systems is also discussed.

Introduction4

Inventory Systems5

Types of Inventory System6

Periodic Inventory System6

Perpetual Inventory System7

Inventory accounting methods8

FIFO8

LIFO8

Benefits of inventory system9

Inventory System for Mexican Tourism Board10

References11

Inventory Management System

Introduction

The changes occurring in the business world are rapid and dramatic in nature and lack the stability observed in the past. Reorganization has become a new standard and the business organizations are going through the reorganization and reinvent processes in order to meet the progressing demands of the global market. The challenge faced by the organizations in the development of the most diverse as well as highly educated workforce is immense and the requirements for the expertise level are increasing regularly. The competition for the goods has become more intense as the struggling of the less educated laborers continues to increase for finding the jobs.

Any retail business, whether an online website or super stores, inventory management forms an essential component of the business. The management of inventory provides the decision makers with the crucial information associated with the products such as low on stock and the requirement of inventory replenishment. Apart from benefitting the organizations, the inventory management provides the customers with precise information such as information about the out-of-stock and backordered or preordered items. Also, the inventory management also provides the insight to the well and poor selling products of the business. This paper analyzes the inventory systems in detail and proposes an inventory count system for the Mexican Tourism Board.

Inventory Systems

The objective of the inventory system employed in any organization is to efficiently manage the inventory. The management of the inventory refers to the replacement of 'inventory', an expensive asset, with the 'information', a less expensive asset. In order to effectively replace the inventory with the information, the replaced information must be reliable, appropriate, consistent and precise. The inventory management system allows the organization to carry lesser inventory, reduces costs and ensures the faster transmission of the products to the customers. Inventory systems also deal with the effective quantity of the inventory required to buffer against the market fluctuations caused by the varied demands of the customers and the suppliers. The inventory management system is employed for the fulfilling following primary and potentially inconsistent objectives.

Customer Service Maximization

Increasing the efficiency of purchasing and production processes

Ensuring minimum inventory investment

Maximization of profit

The inventory system successfully managing the above mention objectives increases the return on inventory and return on assets ratios of any organization (Cachon & Fisher, 2000).

In past, the inventory management was carried ...