A high degree of competition in the market makes it necessary to carry out
activities such as inventory planning. Determination of their optimal number allows to reduce costs, while leaving for the organization the opportunity to make adjustments to
production. Inventory is the entire range of products that are intended for sale and are in the sphere of circulation. It can be in the process of transportation, in the warehouse, as well as in storage. The presence of the necessary volume of this category is a prerequisite for ensuring the continuity of the entire
production process. Inventory is created for specific purposes. The main ones are ensuring the continuity of production to fully satisfy the existing needs of the population, improving the quality of service and increasing the
competitive advantages of the enterprise as a whole.
Functions performed by inventory
The first of them is to ensure uninterrupted circulation and production, as a result of which its constant formation and consumption occurs. The second important function is to satisfy the demand of the solvent population, since it is precisely the commodity stock that acts in the form of supply. And the last, but no less important. Inventory is able to characterize the existing relationships between volumes and structures of categories such as supply and demand.
Formation factors
Firstly, stocks are formed at any stage of commodity distribution, since there are
seasonal fluctuations in the production process and in consumption itself. The second factor is the period of time required for transportation. Of no less importance is the need for certain transformations to create a commercial product from an existing production one. For this, sorting, packaging and other processes are used. The fourth factor is the distance between the direct supplier of the product and the trading organization. Among other things, we must not forget about the need to create reserves and insurance reserves that would ensure the uninterrupted operation of this complex system. There are also many other factors that have a direct impact on stock formation.
Types of inventory
Here you can consider several classification features.
By location
It is customary to distinguish between inventory on the way, at the enterprise or at a trade organization.
By appointment
This feature divides the object under consideration into stocks of early delivery (typical for remote areas, ensure the continuity of production); current storage (the main share belongs to them; necessary to meet the daily needs of the population); seasonal accumulation (furs, vegetables, all kinds of fruits).
By indicators
Inventory is divided into absolute and relative.
In size
This feature allows you to distinguish the following types: average, maximum and minimum reserves.
Summarize
Inventory should be proportional to the volume of turnover of the organization. This requires a competent management system. It should include rationing, operational accounting and appropriate control and regulation.