![]() Inventories are the result of many interrelated decisions and policies within an organization.It is observed hat costs of not having inventories are usually greater than the costs of having them. On the other hand no organization can work without maintaining some inventory i.e. This capital invested in inventories remains idle till items present in stocks are not used. This leads to considerable investment and causes considerable opportunity loss. Inventories require valuable space and consumes taxation and insurance charges. Inventories for any organization is a necessary evil. ![]() Inventories absorbs these fluctuations and helps in maintaining undisturbed production and stable employment rates. But due to their unpredictable behavior, there are always fluctuations in demand or supply of the items which disturbs the schedule of an organization. An organization has to deal with several customers and vendors who are not necessarily close to there works.
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