Current events paper Essay Example | Topics and Well Written Essays - 500 words - 3

Current events paper - Essay Example Managing adequate levels of inventory is important to ensure that the firm’s inventory balance does not hurt the cash position of a firm. In the retailing industry the merchandise in the shelves of the stores represent the inventory of the company. A way to reduce the cost of acquiring merchandise in the merchandising sector is by purchasing in bulk. Companies that purchase in bulk are able to achieve economies of scale. A way to reduce the risk of losing inventory due to fires, natural disasters, or theft is by purchasing insurance for the inventory of a company. The article Your Inventory is Your Cash: Handle With Care (4 Cost-Cutting Tips) discusses the effect and importance of inventory for companies in the industry. Smart use of inventory is an important factor that managers must consider. A lot of space, sales opportunities and cash are tied up on inventory. Storing adequate levels of inventory is important to achieve sales growth. â€Å"Smart use of inventory is vital for them and also for you, if you keep and store any kind of goods or supplies in the operation of your business† (Williams). Four strategies that must be used to manage inventory are frugality, cost tracking, inventory tracking, and sales monitoring. Proper management of inventory can increase the profitability and cash flow of a company. It is important to minimize the amount of slow selling products on inventory. Minimizing inventory saves warehouse space, prevents products from going bad, and it saves money. Tracking costs allows companies to establish appropri ate price levels for its customers. Monitoring costs gives managers the ability to identify areas for improvement. Tracking inventory can help a company determine the proper reorder point of inventory items. Sales monitoring gives the manager the ability to determine the adequate sales level when demand changes. Inventory management has become a critical