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Inventory Management

Inventory Management is the interaction of sales forecast, purchasing requirements, production planning, service level and storage requirements for maximizing return on investment. The purpose and value of this tool is to determine adequate supply of products to meet sales demands. The result is adequate purchases, supplies and inventory to cover actual sales while minimizing inventory costs. The result of a good inventory management system is higher return on investment and service level performance.

Figure 1: "Major Activities Involved In Physical Distribution"*

* redrawn, with modifications, from Wendell M. Stewart, Physical Distribution: Key to Improved Volume and Profits, Journal of Marketing, January 1965, p.66.

Alexandria Marketing Research Group, Inc. 212 1/2 W. 5th St., Joplin, MO 64801, Phone: 888.420.8884
Revision Date June 5, 2008