•Without the proper inventory assortment, marketing may find that sales are lost and customer satisfaction declining.
•Overstocks increase cost and reduce profitability through added warehousing, working capital requirements, deterioration, insurance, and obsolescence.
•As the significance percentage of assets are inventory related, a reduction of firm’s inventory by a few percentage points can lead to dramatic improvement in profits.
•ROI= (Profit/ Fixed assets +Current assets)
•Substantial improvement in the productivity of inventory can be achieved by re-engineering supply chain processes.
•Poor inventory management may lead to stock outs and hence cancellation of customers orders, overstocking leading to insufficient storage space and increase in the number and rupee value of obsolete products.
•Consequently, inventory management has a large financial impact on the firm.
•Investments blocked in inventory cannot be used to obtain other goods or assets that could improve the enterprise performance.
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