ECONOMICS

Detailed explanation-1: -A deep understanding of customer demand for what you sell is the key to proper inventory management and control. Once you understand how your customers buy, you can begin to make smart buying and storing choices. Inventory is expensive to acquire, but businesses do so with the expectation of selling it for a profit.

Detailed explanation-2: -Inventory management helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds to trends to ensure there’s always enough stock to fulfill customer orders and proper warning of a shortage.

Detailed explanation-3: -Inventory management describes the system businesses use to ensure optimal inventory levels at all times by organizing sourcing, storing and selling both raw materials and finished product. Good inventory management leads to optimal stock levels at the right price at all times and reduces overall costs.

Detailed explanation-4: -FIFO and LIFO. LIFO and FIFO are methods to determine the cost of goods. FIFO, or first-in, first-out, assumes the older inventory is sold first in order to keep inventory fresh. LIFO, or last-in, first-out, assumes the newer inventory is typically sold first to prevent inventory from going bad.