Inventory Management In Retail Business

1. Introduction
1.1. Inventory Management
By definition, inventory is the list of products that a particular company offers to its customers. On the other hand, inventory management is the procedures, the policies, and the techniques deployed by such a company in availing and maintaining an optimum number of each of the items it provides to its customers (Tamegawa 665). Correspondingly, for different businesses the activities that ensure that an optimum number of products are availed such as ordering procedures, shipping, cargo handling, and the relating expenses and costs, all fall under inventory management. Even though inventory is related to stock available, the two are by definition two different aspects of a business. In relation, the

To emphasize, inventory is one of the largest businesses’ assets in many industries. In fact, the moment a business is initiated and the inventory levels determined, they essentially become an important factor that is considered in the overall budgeting systems within the business. Therefore, the decisions behind inventory management depend on the balance of holding costs, ordering costs, and the shortage costs. Perhaps more importantly, inventory management comes in handy in meeting unexpected and seasonal demands during instances initiated by an influx of customers (Tamegawa 666). The fact that customers expect to find goods or services from a business when they need them, is a crucial consideration in inventory management. At such instances, inventory management ensures that customers are not disappointed during influxes and during seasonal shopping sprees such as Christmas and New Year’s

More specifically, the impact of inventory management has led to great developments in terms of efficiency, access to information and data, and the accuracy of such data thereby having an effect on the overall performance of a business (Plinere & Borisov 91). Additionally, inventory management systems ensure that a business has a platform for the evaluation of risks which then leads to proper management decisions that protect the investments used in purchasing inventory. In fact, inventory systems provide the ability for a business to have sufficient stock within the premises without necessarily investing in quantities they do not require. The basic functionality of an inventory management system is to track each unique product that a business provides, and thus triggering the ordering procedure when the inventory levels fall below a predetermined number. To increase the efficiencies of an inventory management system, most businesses interlink the system with the point of sale (POS) system. This interlinkage provides the inventory system with the ability to remove each sold item from the list following each purchase. Moreover, such interlinkage creates a closed information loop within the business which has advantages in ensuring informational availability and