Short Paragraph on Inventory Management

Here is your short paragraph on inventory management!

Inventory management and control will always play a vital role in the operations of firms involved in distribution.


Their significance is more salient in periods of shortages, slow economic growth and high interest rates.

Inventory control encompasses decisions over how much and when to order as well as how much inventory to keep in stock. The objective of inventory control is to minimise total inventory cost subject to demand and service constraints.

These inventories may be held at the point of production or positioned in wholesale or retail distribution centers that serve, together with outbound transportation, to define the physical distribution strategy of the firm.

Although the decisions involving ownership, type, and location of warehouses are obviously important, solutions to problems associated with inventory management and control are crucial to the viability of all commercial channel members, irrespective of the warehouse decisions made.


Inventory control theory deals with the determination of optimal procedures for procuring stocks to meet future demand. The decision concerning when and how much to reorder is a matter of balancing a number of conflicting cost functions.

The fundamental purpose of any inventory control system is to tell a firm i) how much to reorder, ii) when to reorder and iii) how to control stock outs at the lowest cost.

Idle assets or non-existence assets (low inventory) cannot earn a return and this leads to lost opportunities. Inventory management should aim to facilitate the manufacturing distribution-marketing cycle at the minimum cost for a given level of service.

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