33:799:301 Lecture 4: Inventory Management

• School: Rutgers University
• Department: Supply Chain Management
• Course: 33:799:301
• Professor: Chris Provines

Document Summary

Inventory is a quantities of good and materials that are held in stock. Can be one of the largest and most important assets in an organization. Too much inventory can also be a signi cant liability. Inventory is an asset and potentially a liability. Holding some inventory is necessary to maintain operations and ensure that products are available when customers demand them. Too much inventory ties up capital which could otherwise be used for purposes such as r&d, marketing and sales, stockholder dividends, salary increases, etc. The more inventory a company holds, the more space is needed, and space costs money. Besides storage costs, a company might have to pay for security, insurance, taxes, etc. to hold inventory. Inventory can become a liability if it becomes unusable due to expiration, obsolescence, damage, or spoilage. Categories of inventory: raw materials, work-in-process (wip, finished goods, maintenance, repair, and operating (mro) supplies.