[et_pb_section fb_built="1" specialty="on" _builder_version="4.9.3" _module_preset="default" custom_padding="0px|0px|0px|||"][et_pb_column type="3_4" specialty_columns="3" _builder_version="3.25" custom_padding="|||" custom_padding__hover="|||"][et_pb_row_inner _builder_version="4.9.3" _module_preset="default" custom_margin="|||-44px|false|false" custom_margin_tablet="|||0px|false|false" custom_margin_phone="" custom_margin_last_edited="on|tablet" custom_padding="28px|||||"][et_pb_column_inner saved_specialty_column_type="3_4" _builder_version="4.9.3" _module_preset="default"][et_pb_text _builder_version="4.9.3" _module_preset="default" hover_enabled="0" sticky_enabled="0"]
-
- QUESTION
Describe the three most commonly used inventory performance measures
[/et_pb_text][et_pb_text _builder_version="4.9.3" _module_preset="default" width_tablet="" width_phone="100%" width_last_edited="on|phone" max_width="100%"]
| Subject |
Business |
Pages |
2 |
Style |
APA |
[/et_pb_text][/et_pb_column_inner][/et_pb_row_inner][et_pb_row_inner module_class="the_answer" _builder_version="4.9.3" _module_preset="default" custom_margin="|||-44px|false|false" custom_margin_tablet="|||0px|false|false" custom_margin_phone="" custom_margin_last_edited="on|tablet"][et_pb_column_inner saved_specialty_column_type="3_4" _builder_version="4.9.3" _module_preset="default"][et_pb_text _builder_version="4.9.3" _module_preset="default" width="100%" custom_margin="||||false|false" custom_margin_tablet="|0px|||false|false" custom_margin_phone="" custom_margin_last_edited="on|desktop"]
Answer
Common Inventory Performance Measures
Introduction
The primary aim of any firm is to make profits, and therefore it is crucial to gauge how fast the available stock moves or sells. This is important as it shows the firm’s decision makers and investors how liquid or fast-selling its inventory is. This short essay discusses some of the common inventory performance measures.
Common Inventory Performance Measures
The three main financial metrics used to measure the performance of firm’s inventory are average aggregate inventory, average days of inventory and inventory turnover. To begin with, average inventory is the value of the entire inventory held by a firm on average at any given day divided by a specified period of time. A lower value is more desirable for a company as it indicates that the inventory has not resided in the firm for a long time. However, a high value indicates a slow movement of stock in the firm.
On the other hand, average days of inventory is the measure of how many days a company will take to sell of its inventory without adding more. A lower value of average days of inventory is preferable as it indicates a shorter duration to clear stock, meaning that the inventory is selling stock at a faster rate. Lastly, inventory turnover measures how many times a firm sells and replaces its inventory in its system over a specified period of time. A high value of inventory turnover would signal to a company that its stock has low demand in the market. In contrast, a lower value of inventory shows that the stock is selling well, thereby suggesting that the company is managing its inventory properly.
Conclusion
In conclusion, it is important for any firm to regularly measure performance of its inventory since such practice will enable it determine the amount of inventory to stock, and ultimately avoid unnecessary inventory costs. Three key measures that a firm can use to determine the performance of its inventory, as highlighted in this essay, include average aggregate inventory, average days of inventory and inventory turnover.
References
|
|
Das, A. (2015). An Introduction to operations management: The joy of operations. Routledge.
Appendix
|
Appendix A:
Communication Plan for an Inpatient Unit to Evaluate the Impact of Transformational Leadership Style Compared to Other Leader Styles such as Bureaucratic and Laissez-Faire Leadership in Nurse Engagement, Retention, and Team Member Satisfaction Over the Course of One Year
|
|
|
|
|
|
|
[/et_pb_text][/et_pb_column_inner][/et_pb_row_inner][et_pb_row_inner _builder_version="4.9.3" _module_preset="default" custom_margin="|||-44px|false|false" custom_margin_tablet="|||0px|false|false" custom_margin_phone="" custom_margin_last_edited="on|desktop" custom_padding="60px||6px|||"][et_pb_column_inner saved_specialty_column_type="3_4" _builder_version="4.9.3" _module_preset="default"][et_pb_text _builder_version="4.9.3" _module_preset="default" min_height="34px" custom_margin="||4px|1px||"]
Related Samples
[/et_pb_text][et_pb_divider color="#E02B20" divider_weight="2px" _builder_version="4.9.3" _module_preset="default" width="10%" module_alignment="center" custom_margin="|||349px||"][/et_pb_divider][/et_pb_column_inner][/et_pb_row_inner][et_pb_row_inner use_custom_gutter="on" _builder_version="4.9.3" _module_preset="default" custom_margin="|||-44px||" custom_margin_tablet="|||0px|false|false" custom_margin_phone="" custom_margin_last_edited="on|tablet" custom_padding="13px||16px|0px|false|false"][et_pb_column_inner saved_specialty_column_type="3_4" _builder_version="4.9.3" _module_preset="default"][et_pb_blog fullwidth="off" post_type="project" posts_number="5" excerpt_length="26" show_more="on" show_pagination="off" _builder_version="4.9.3" _module_preset="default" header_font="|600|||||||" read_more_font="|600|||||||" read_more_text_color="#e02b20" width="100%" custom_padding="|||0px|false|false" border_radii="on|5px|5px|5px|5px" border_width_all="2px" box_shadow_style="preset1"][/et_pb_blog][/et_pb_column_inner][/et_pb_row_inner][/et_pb_column][et_pb_column type="1_4" _builder_version="3.25" custom_padding="|||" custom_padding__hover="|||"][et_pb_sidebar orientation="right" area="sidebar-1" _builder_version="4.9.3" _module_preset="default" custom_margin="|-3px||||"][/et_pb_sidebar][/et_pb_column][/et_pb_section]