Overstock Hazards Analysis

(vi) Overstock Hazards

When inventory is not managed well, the organization can wind up with overstock. Overstock comes with its own set of problems. The longer an item sits unsold in inventory, the greater the chance it will never sell at all, meaning it has to be written off, or at least discounted deeply. Products go out of style or become obsolete. Perishable items get spoilt. Items that linger in storage get damaged or stolen. And excessive inventory has to be stored, counted and handled, which can add on holding costs.

2.3.0 Actual Review

Inventory management has been defined as the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the goods it will sell as well as the

Information technologies have been paramount in recent decades and have been leading developments in the globalization and societies. Information technology plays a vital role in huge inventory management. It can be a strategy weapon to support the objective and strategy organization. The effectiveness of Computerized inventory management systems (CIMS) can be evaluated as added value of benefits (Corner,1989). Unlike the manual inventory management system of using stock cards, computerized inventory management systems consist of reliability, relevance, and

In order to produce useful and meaningful inventory information, data must be processed. The most companies process data by using computers. Computerized inventory management systems produce data by following instructions and procedures. In computerized inventory management systems, software includes procedures and instructions that direct computers to process the data. Users are people who use the inventory information produced by the system and who interact with the system. For example, procurement officers who use inventory reports that are produced by the system are the users of the system. In order to make the computerized inventory management system produce correct, and error free inventory information, necessary measures should be taken to protect and control the inventory information.

The introduction of microcomputers to inventory management practices has greatly reduced the time taken to produce accurate and timely reports for management. This time saving is passed on to clients and their businesses through management timely decision making which then translates into financial benefits. All information needs to be accurate and timely to be useful. The timeliness of a report or inventory orders is vital for control