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Inventory Management . Goals Prepare a purchasing plan for inventory. Describe the perpetual and periodic inventory methods. Determine how much inventory to keep in stock. . Terms. perpetual inventory method stock card point-of-sale software system periodic inventory method
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Inventory Management Goals • Prepare a purchasing plan for inventory. • Describe the perpetual and periodic inventory methods. • Determine how much inventory to keep in stock.
Terms • perpetual inventory method • stock card • point-of-sale software system • periodic inventory method • stock turnover rate
The Marketing Concept and the Product • The wants and needs of customers are the most important consideration when developing any product or marketing effort. • The U.S. market is consumer-driven.
Product Mix • product mix • the different products and services a business sells • Entrepreneurs may carry some products that are not profitable because the products provide a convenience for customers.
The Small Percentage Often a small percentage of the product selection makes up the majority of sales revenue.
Meet Inventory Needs • inventory • the stock of goods a business has for sale • Inventory costs include: • storage • insurance • taxes • purchase price of inventory • Inventory must be well managed if you want to make a profit.
Purchasing Plan • The sales forecast can be used to calculate required inventory. • Ending inventory = Beginning inventory + Purchases ─ Sales
What are some of the concerns managers have regarding inventory? Chapter 10
Track Your Inventory • perpetual inventory method • monitors inventory levels daily • efficient • avoids inventory shortages • stock card • a paper inventory record for a single item • electronic versions available
reorder point • the minimum amount you want to keep in inventory • indicates when you should place an order to receive more inventory
Use a Computer • point-of-sale software system • updates inventory as each sale happens • provides up-to-date inventory levels
Periodic Inventory Method • taking a physical count of merchandise at regular intervals • Take a Physical Inventory • counting and recording actual units • should be done once or twice a year • can highlight discrepancies caused by a failure to record • sales • theft • damage
How does the perpetual inventory method differ from the periodic inventory method?
Manage Your Inventory • Costs of Carrying Inventory • Costs can increase for many reasons including: • obsolescence • deterioration • interest fees • insurance • storage
Costs of Being Out of Stock • Stock shortages can lead to: • loss of sales • loss of customer loyalty • Inventory Turnover Rate • the rate at which inventory is sold and replaced with new inventory Why is this important for you to know?
You Task • Complete the Inventory Management Worksheet • Complete the calculations: - Yearly sales (quantity sold retail price) - ending inventory value (ending inventory retail price) • Answer the questions • Email Mr. Farrar when you both parts are finished.