Section 5
Inventory Management
By Boundless
![Thumbnail](../../../../../../figures.boundless-cdn.com/11412/square/mlcc-manufacturing-process.jpg)
Most manufacturing organizations usually divide their inventory into raw materials, work in process, finished goods, and goods for sales.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11419/square/-army-unit-badge-inventory.jpeg)
FIFO, LIFO, and average cost methods are accounting techniques used in managing inventory.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11415/square/10-19-20at-2010.59.01-20pm.jpg)
The ABC analysis is an inventory categorization technique often used in material management wherein accuracy and control decreases from A to C.
![Thumbnail](../../../../../../figures.boundless-cdn.com/34613/square/yhcpj8d3qwqnhxaby7v1.jpg)
Seasonal trends and internal projections of consumption in certain goods can have a significant impact on opportunity cost and potential profit for an organization.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11972/square/inflation-2002.jpg)
High inflation encourages companies to keep a high level of inventories.
![Thumbnail](../../../../../../figures.boundless-cdn.com/31122/square/5903703724-5eff4e3fce.jpeg)
Inventory costs depends on methods used, which include Specific Identification, Weighted Average Cost, Moving-Average Cost, FIFO, and LIFO.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11829/square/equation-201.jpg)
Economic order quantity is the order quantity that minimizes total inventory holding costs and ordering costs:
Just in time (JIT) is a production strategy that strives to reduce in-process inventory and carrying costs in a manufacturing system.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11908/square/450px-clerk-inventory.jpeg)
Improved inventory management can lead to increased revenue, lower handling and holding costs, and improved cash flows.
![Thumbnail](../../../../../../figures.boundless-cdn.com/11974/square/inventory-control-q-ic-da.jpg)
Excessive inventory means idle funds which earn no profits; inadequate inventory means lost sales.