Reasons For The Inventory Of Inventory

In addition increases the costs due to out of date and damage lots of inventory, which are also leading to high shrinkage level for the retailer. It is possible to overcome these barriers and enhance the company’s reputation, increase customer satisfactions including high level of profitability by practising good inventory management system in place (Warren, Reeve, & Duchac, 2013).

However, forecast errors will also lead to unhappy customers, lost sales, and excessive inventory. To minimize errors, retailers should find the right demand forecast. Retailers do not want to have a lot of inventory sitting in the back room and too little inventory that will cause out of stock. Holding huge inventory will cause a retailer to have more expenses and decrease their profit if item is not sold especially if the product is innovative type like electronics. The challenge is to balance the inventory with demand. Communication and contribution from people in functional area is also important to create better information and improve overall accuracy. At this time, customer satisfaction will start to decrease. For example, MPRNews says one of Target loyal customer, Ann Hendricks, she is disappointed with target store in St.Paul. “Too many times, she says that store is out of the milk, coffee, bread, pasta and other staples she wants. At Target, sometimes the whole section of cheeses is blank. There's nothing in there” (Moylan). A loyal customer like Ann Hendricks goes to the Lunds & Byerlys store in downtown St. Paul to buy her grocery

The retailers had to estimate their customers’ demands well in advance of the selling season and place bulk orders for each season’s inventory. This involved high risk for the retailers as over-estimation would lead to unsold stock; whereas under-estimation led to stock outs and loss of potential sales.

These spikes and troughs could be the result of price discounts that the company is offering due to which customers are buying in bulk and stocking up on products. This could lead to variability in demand, leading to excess demand or no demand that would lead to non-efficient production by the company. Root cause analysis should be performed, and if it is established that volume discounts are leading to this phenomenon, it is recommended that the company minimize discounting and work with the customers using a partnership model to ensure a steady demand.

The sluggish sales in the furniture industry can account for the increase in inventory days. Haefren inventory in 1994-1995 stayed on the floor for around 129 days before it was sold. The longer period that they are holding inventory is increasing their cost of goods sold. Not only are they holding inventory for a longer period of time, but they are also underutilizing their fixed assets.

There are various reasons for holding inventory. Inventory acts as a buffer between supply and demand fluctuations and irons out supply chain system failures. The smoother your supply chain operates and the better you are able to forecast the less inventory you have to hold, unless you gain some economies of scale in purchasing, transportation and or manufacturing. Especially for supermarket, holding inventory can lead to customer satisfaction and increase their loyalty. Customers tend to stop by most often at supermarket where they surely know the item is available.

The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products

Inventory Management- The entire supermarket must be working closely on inventory management so the perfect amount of inventory is always on hand. As I mentioned before, too little of a product results in loss of sales and unhappy customers, but too much is a waste of resources.

When working in the catalog industry and a customer calls in and wants to order a red sweater and you are out of red sweaters, the company might have just lost the sale if the customer does not want a substitute colored sweater. This is the part of the continuous problem that L.L. Bean, Inc. has with item forecasting and inventory management. Working in a catalog business really helps companies to capture demand, but the problem most companies have is matching demand with supply. Every sale that is generated for L.L. Bean is by customers that want a particular item and if that item is not available, they lose the sale. Customer behavior is hard to predict which affects the demand level of all the

A marketer is constantly pressured to meet projected sales, therefore they should not have a large percentage of inventory in stock because it means they are not selling a sufficient amount of items. They will simply not be making a profit. It is healthier to have less in the inventory because you want to convert the inventory into cash. The inventory can be broken down into many sections. For example, a retail business such as Macy’s can manage one item of their inventory by different categories, such as color and size. This will let the marketer know what items are being sold the most so they can order more of the popular item or less of the one not being sold as often. This has to be examined constantly as the item of clothing might be more

At the core of L.L.Bean’s pricing and promotion strategy lies its inventory strategy. L.L.Bean’s inventory strategy segments its products into ‘core’ and ‘non-core’ items. Core items are products in constant high demand, those the company never want to be out-of-stock. These include items like Bean Boots, the Deluxe Book Pack, their Barn Jackets, and the ever-popular Boat and Tote bag. These items sell year-round and are not influenced by seasonal shopping behaviors (Cooke, 2011).

– Irregular demand can be demand which is not consistent. For example, demand of coats, jackets in winter usually increases.

An increase in inventory is likely to lead to an increase in the cost of managing the goods and also waste output due to the fact that some of their goods might perish if stored for too long.

SF does not want the product overproduced, provide timely reporting of product sales in order to avoid this problem. For this reason, the company's inventory becomes a serious problem.

Inventory itself is a list of products that a company has available for sale to customers. So what is Inventory Management? By definition according to BusinessDictionary.com, “Inventory Management is policies, procedures, and techniques employed in maintaining the optimum number or amount of each inventory item”.