Inventory is the total amount of goods and materials in a shop or factory. Regular inventory helps avoid shortages, theft, and inaccurate accounting. Companies use par sheets to order items and conduct quarterly inventories for financial reports. High inventory can lead to discounts to attract customers.
Inventory is the total amount of goods and/or materials contained in a shop or factory at any given time. Store owners need to know the precise number of items on their shelves and storage areas in order to place orders or control losses. Factory managers need to know how many units of their products are available for customer orders. Restaurants need to order more food based on their current supplies and menu needs. All of these activities rely on an inventory number to provide answers.
The word “inventory” can refer to both the total quantity of goods and the act of counting. Many companies inventory their supplies on a regular basis to avoid running out of popular items. Others do an inventory to make sure the number of items ordered matches the actual number of items physically counted. Shortages or surpluses after an inventory can indicate a problem with theft (called “shrinkage” in retail circles) or inaccurate accounting practices.
Restaurants and other businesses that conduct frequent inventories can use an outcome-based “peer” system. The inventory itself can reveal 10 apples, 12 oranges and 8 bananas on the produce shelf, for example. Each item’s preferred number is listed on a “par sheet,” a master list of all items in the restaurant. If the datasheet calls for 20 apples, 15 oranges, and 10 bananas, the manager knows how to place an order for 10 apples, 3 oranges, and 2 bananas to hit par. The same principle applies to any other retail business with a number of different product lines.
Companies also conduct an inventory every quarter in order to generate numbers for financial reports and tax records. Ideally, most businesses want to have enough inventory to fulfill current orders. Having too many products languishing in a warehouse can make a business less attractive to investors and potential customers. Quite often a business will offer significant discounts if inventory numbers are high and sales are low. This is commonly seen at new car dealerships as manufacturers release next year’s models before the current vehicles on the lot have been sold. Furniture companies may also offer “stock-reduction sales” in order to free up their showrooms for new products.
Protect your devices with Threat Protection by NordVPN
