Basic inventory principles

First it’s important to remarck that inventory control is an inexact science. This will give us an introduction to  basic inventory principles:

Importance of inventory costs.

What are the typical costs involved? (inventory cost drivers):

• Facility costs
• Human capital: The cost of labor to maintain storage
• Finance costs.
• Management costs.
• Procurement costs: costs of purchasing.
• Inventory turnover.
• Sock accuracy
• Service levels: critical goods, non critical goods, scheduled delivery