Inventory System

Inventory Systems Summary

According to the U.S. Small Business Administration, “Inventory refers to stocks of anything necessary to do business” (U.S. Small Business Administration, 2010) The U.S. Small Business Administration publication describes what constitutes successful inventory management balancing cost versus benefits of inventory, including Maintaining a wide assortment without spreading the rapidly moving items too thin, Increasing inventory turnover without sacrificing service, Keeping stock low without sacrificing performance, Obtaining lower prices by making volume purchases, Maintaining an adequate inventory without an excess of obsolete items.

Wal-Mart runs its stores on a perpetual inventory system. This system records the quantity of items sold as items are purchased. The computer system at Wal-Mart constantly keeps up with additions or deductions from inventory and tells management what items are on hand. The organization also conducts counts of employee manual counts of inventory periodically. When an item arrives at the Wal-Mart distribution center it is scanned into the inventory system. When the items are purchased by the consumer, the point-of-sale system reduces the inventory from that purchase. According to Wal-Mart’s Gail Lavielle, a leaner inventory will help clear out store clutter and help Wal-Mart focus on specific brands and products that consumers want (The Associated Press, 2006).

According to Mr. Eugene F. Brigman, Fundamentals of Financial Management, 5th ed., Companies are increasingly employing Inventory System. A computer start with an inventory counts in memory. Withdrawals are recorded by the computer as they are made, and the inventory balance is constantly revised. When the recorded point is reached, the computer automatically places an order, when this new order is received, the recorded balance is increased. Retail stores have carried this system quite far, each item has magnetic codes, and as on item is checked...