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.
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