Inventory Systems
Michael Asibu, Woodrow Lemon, Laura Moll, Jenessa Nagozruk, Brian Norton
QRB/501
May 21, 2012
Ohidul Siddiqui
Inventory Systems With the increasing demand to cut costs and increase revenues, developing the right inventory systems have become essential to compete in business. According to the Counselors to America’s Small Business, “Control of inventory, which typically represents 45% to 90% of all expenses for business, is needed to ensure that business has the right goods on hand to avoid product shortage and meet the consumer’s needs” (Counselors to America’s Small Business, p. 1). To ensure proper business practice an evaluation of inventory systems is necessary to ensure businesses can be cost-efficient, profitable, and provide for consumers’ needs.
Top and Bottom System The top and bottom inventory system seems simple at first glance. “In this system, [the company] puts limits on how high and low [the company] inventory levels can go for each product (Fishbowl, 2012). The company sets two levels for the stock. The first is the level the managers know that they need to order, and the other is the level that the managers need to bring the stock back to. So if the top level was 15 and the bottom level was five the managers would order 10 more when the company hit five products left. This works to an extent but if the products were snow shovels, then keeping 15 on hand yearly would not make sense. The business would be losing valuable storage space. On the other hand this type of inventory system lets the company know exactly how much space is needed in the stock room. If the business knows that 15 of these products are the most that it will have the business will have this space designated for those products without crowding. Anyone can manage this system. Simply count how many products are on hand, if it is below the bottom