Calculating the True Cost of Inventory

摘要

Have you ever considered that the inventory information maintained by your company's accounting department may not reflect the detail you need to really manage inventories? While inventory costs serve the needs of the accounting department, additional information may be required to optimize inventory turns, minimize investment, and deliver the desired level of customer service. The inventory investment consists of the total dollars invested in raw materials, work-in-process, and finished goods. The inventory turnover rate compares the absolute inventory on hand to demand for a given period of time, normally, one year.