Inventory Management and Inventory Related Costs

Inventory management is a highly important factor which affect the financial decision making in any manufacturing concern. Effective inventory management calls for special expertise of managers in order to avoid

Rejections
Stock outs
Carrying Costs
Procurement Costs
Storage costs
Opportunity cost of the funds invested in inventories
Timely availability
Obsolescence

Inventory or store managers in collaboration with the finance and budgeting department needs to take the decisions considering all the above aspects of inventory costs.