Importance of Inventory Management:
Inventory management is very significant for making company’s sales, production, strategic, and financial planning. An inventory manager must aware that inventory, its quantity, its cost, its rates and cost since inventory is effected big number of factors. Therefore, it must be based on flexible approach; therefore that company can modify its design according to modifications in inventory market.
With effective inventory management, sales and production department can work to know inflow and outflow of material. This information can be very helpful for management to decrease working capital in the form of inventory, since raw material, work in progress or finished stocks are the block of fund and money. However management must not forget that at the time of inflation to buy high quantity can give us earning due to rising prices of similar raw material within short period of time. With appropriate inventory management, we can make balance between supply of raw material and demand of raw material.
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