Inventory management models pdf

This article does not cite any sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Stock management is the function of understanding the stock mix of inventory management models pdf company and the different demands on that stock.


The demands are influenced by both external and internal factors and are balanced by the creation of purchase order requests to keep supplies at a reasonable or prescribed level. Goods are sold to customers at the shops. The management of the inventory in the supply chain involves managing the physical quantities as well as the costing of the goods as it flows through the supply chain. The calculation can be done for different periods.

If the calculation is done on a monthly basis, then it is referred to the periodic method. AVERAGE total cost by total qty to arrive at the Average Cost of Goods for the period.

This Average Cost Price is applied to all movements and adjustments in that period. Ending stock in qty is arrived at by Applying all the changes in qty to the Available balance.

Multiplying the stock balance in qty by the Average cost gives the Stock cost at the end of the period. Using the perpetual method, the calculation is done upon every purchase transaction.

The only difference is the ‘periodicity’ or scope of the calculation. In practice, the daily averaging has been used to closely approximate the perpetual method. The implementation of SaaS inventory management software, like Unleashed Software or Cin7, has become a valuable tool for organizations looking to efficiently manage stock.

While the capabilities of applications vary, most inventory management applications give organizations a structured method of accounting for all incoming and outgoing inventory within their facilities. Organizations save a significant amount in costs associated with manual inventory counts, administrative errors and reductions in inventory stock-outs. Often tracking stock just through sales and returns is not enough for retailers and does not meet the demands of customers multichannel expectations.