The Role of Inventory in Practice

Most managers are aware that inventory cannot exist without costs being incurred. In the absence of an accurate indication of what these costs are the decision on the level of stocks to be held becomes very subjective. The result is that in some instances stock levels are too low whereas in other instances the reverse is the case. This article seeks to demonstrate that it is possible to achieve significant savings through quantitative analysis which can be comprehended by managers who do not have specific mathematical skills.