What you say is true, one of which is important for us to have a list of existing product stock. And check physical stock regularly, and immediately add stock that is already running low.
How to avoid low inventory in business
- Thread starter cherry123
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I don't think we need to order more merchandise so there will be over inventory which results in increased maintenance costs. So in order not to have a shortage or excess of merchandise, you need to calculate the minimum inventory or safety stock first.
As a business owner, you don't need to check inventory all the time, which number in the thousands, and your time will be spent just counting merchandise inventory, but through minimum inventory or safety stock, you will know the amount of inventory that you have recorded according to the procedure or system you use. like fifo, lifo etc. Meanwhile, stock taking only needs to be done for a certain period, for example one month, which must be calculated by other people who do not know the amount of inventory that aims to check whether the inventory records are the same as the physical quantities of goods.
Well, I think that the hoarders of the products usually take advantage in such kind of conditions in many countries. They tend to raise the prices of products that are short and this increases inflation.
It is all about being observant to know when inventory is running out of stock. You need to have a strong sense of estimation for it to work out properly and have a balance.
The minimum amount of stock that must be available in the warehouse or safety stock is not estimated but calculated using a certain formula, after that you can determine the re-order point.
It depends on the type of business. Food products need to have a low inventory as the items have a shelf life whereas industries dealing in other products must decide inventory normal for Raw material, work in process, and finished products depending on the process and availability of raw material.
Business people don't need to do a physical inspection of merchandise every day, but you can see from the inventory book that you have made either by any method, the inventory book will show the beginning inventory amount plus incoming goods from purchases and outgoing good or sales so that there will be an ending inventory. . and businesses can place orders when the ending inventory items are close to safety stock.
Good explanation here as I am not fully into business and so do not know of this particular method you made mention of right there but would take note of it in case I find myself running a business other than the one I have in mind which had to do with physical inspection.
