11.2 GOAL OF INVENTORY MANAGEMENT
Since inventory management is fraught with both costs and benefits, a finance manager must make a trade-off between the two so as to maximise the value of the firm. To be precise, he or she must take into account four important points. They are as follows:
- Inventories should be grouped according to their importance and special care should be taken of more important items;
Break-up of Inventory among 1,377 private limited companies in India
Source: RBI Bulletin, Mar. 2007.
- The size of the order for inventories should be economic so as to minimise the total cost;
- The re-order point needs to be determined ...