Inventory Management: Planning, Coordination, Controlling Flow of Inventory

Satisfactory Essays
INVENTORY MANAGEMENT (JIT AND BLACKFLUSH COSTING) Inventory Management includes planning, coordination, and controlling the flow of inventory into, through, and out of company. There are 5 categories of cost that are associated with goods sold:
1. Purhcasing costs: the cost of goods from supplier and freight
2. Ordering costs: the cost of preparing purchase orders, receiving and checking the goods, matching invoices received, purchase orders and delivery notes to make payments
3. Storage cost: the cost of holding inventory of goods sale
4. Stockout costs: the cost is incurred when the company ran out of certain items that are requested by customer
5. Quality costs: the cost is incurred if the features and characteristics of the
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Some suppliers may have been prepared than others to support the purchase of JIT.
Inventory levels are kept by the retailer is affected by the demand patterns of customers and supply relationships with distributors and producers, suppliers to the manufacturer, and so on. The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to customers, regardless of whether those activities occur in the same company or in other companies. Retailers need to buy supplies on the basis of JIT only if the activity along the supply chain are planned, coordinated, and controlled.
JIT Production is a manufacturing system "demand-pull" that makes every component in a production line soon after, and only when, needed by the next step in the production line. The benefits of JIT production is lower inventory storage costs. However, there are other benefits of lower inventory, is to strengthen the emphasis on improving quality by eliminating specific causes of rework, junk, and waste, as well as manufacturing lead time shorter.
Backflush costing is a costing system that ignores the recording of a number of entries relating to the stages ranging from the purchase of direct materials to the sale of finished goods. Backflush costing is used to delay the recording of some of the entries until later in the cycle of production and sales.
The steps to charge the units sold and to inventories:
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