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    What Is Inventory

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    Diwakar Bisht
    Inventory refers to goods and materials held by a business for resale, including raw materials, works in progress, and finished products not yet sold. It includes all goods prior to sale and is categorized as buffer stock, which is extra inventory to reduce stockouts, or reorder level, which is the amount that triggers reordering. Costs associated with holding inventory are ordering costs, setup costs for changing production, holding costs like warehousing, and shortage costs from not meeting demand.

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    What Is Inventory

    Uploaded by

    Diwakar Bisht
    14 views2 pages
    Inventory refers to goods and materials held by a business for resale, including raw materials, works in progress, and finished products not yet sold. It includes all goods prior to sale and is categorized as buffer stock, which is extra inventory to reduce stockouts, or reorder level, which is the amount that triggers reordering. Costs associated with holding inventory are ordering costs, setup costs for changing production, holding costs like warehousing, and shortage costs from not meeting demand.

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    Inventory refers to goods and materials held by a business for resale, including raw materials, works in progress, and finished products not yet sold. It includes all goods prior to sale and is categorized as buffer stock, which is extra inventory to reduce stockouts, or reorder level, which is the amount that triggers reordering. Costs associated with holding inventory are ordering costs, setup costs for changing production, holding costs like warehousing, and shortage costs from not meeting demand.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    14 views2 pages

    What Is Inventory

    Uploaded by

    Diwakar Bisht
    Inventory refers to goods and materials held by a business for resale, including raw materials, works in progress, and finished products not yet sold. It includes all goods prior to sale and is categorized as buffer stock, which is extra inventory to reduce stockouts, or reorder level, which is the amount that triggers reordering. Costs associated with holding inventory are ordering costs, setup costs for changing production, holding costs like warehousing, and shortage costs from not meeting demand.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    What is Inventory?

    Inventory is goods and materials that a business holds for the aim of resale .It is a
    complete list of items such as goods in stock and property .Inventory refer to all
    work that has occurred like raw materials , partially finished products , finished
    products prior to sale and departure from the manufacturing system . In short
    inventory refer to all work prior to sale.

    Categorisation
    1.BUFFER STOCK

    It is described as a level of extra stock that is maintained to reduce risk of


    stockout.

    2.REORDER LEVEL

    It is the level of inventory stock where stock falls to the amount, the item must be
    reordered.

    Costs associated with inventory


     Ordering cost incurred to prepare a purchase order

     Setup cost It is a changeover cost used at last few minutes when


    manufacturers retooling for new products.

     Holding cost It is the carrying cost refer to total cost of holding inventory,
    such as warehousing cost, rent, salaries and utilities.

     Shortage cost It is the cost having a shortage and not being able to meet
    demand from stock.

    https://www.researchgate.net/publications

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