Reply to at least 2 of your classmates and/or the instructor in a minimum of 175 words. Be constructive and professional in your responses.

Demarcus Austin

Hello Class,

Inventory management is the correct quantity at the right time to meet the customer demand. With the correct frequency, ensure the cost of minimizing the inventory holding, ordering, and shortages while ensuring enough inventory to meet the demand. Supplier relationship management will manage this process to maximize profitability with the velocity of inventory turns to achieve the firm's metric. Different inventory functions, such as anticipation inventory with forecasting, will allow the company to maintain a successful inventory management strategy.

The annual holding cost is storing the inventory for a year, calculated as a percentage of the total inventory value, the cost of storing (bin location) associated with the warehouse lease, insurance, and interest rate as subtracted from gross profit.

However, the ordering cost is the cost of placing the order. This might be a calculation of the cost of goods sold, the labor, paperwork, and final mile delivery to the consumer. When there is no inventory to fulfill the customer's order, the shortage cost of not having enough stock to meet the demand rolls to a trailing status or back order that can result in a loss of sales and customer dissatisfaction, promoting the customer to shop from another company.