Jonics

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CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES Review of related literature and studies were conducted which was found to have a great significance to the study are selected and are herein summarized. Foreign Literature One of the biggest challenges of an enterprise is to maintain the appropriate inventories and control its cost of sales. One businessman states that success in business is more than good products; success depends on assigning and monitoring costs of inventory and applying sound inventory management procedures. (Baysa, 2014 p.203) PAS 2, paragraph 6, defines inventories as “assets which are held for sale in the ordinary course of business, in the process of production for such sale or in the form of material or…show more content…
Work-in-process (WIP) refers to all items in process throughout the plant. Since products are not manufactured instantaneously, there is always some WIP inventory flowing through the plant. After the product is completed, it becomes finished goods --the bicycles, stereos, CDs, and automobiles that the company sells to its customers. Distribution inventory consists of finished goods and spare parts at various parts in the distribution system—for example, stored in warehouses or in transit between warehouses and consumers, Maintenance, repair and operational (MRO) inventory are supplies that are used in manufacturing but do not become part of the finished product. Examples of MRO are hand tools, lubricants, and cleaning supplies. (Reid and Sanders, 2012 p.405-406) The objectives of inventory management are to provide the desired level of customer service, to allow cost-efficient operations, and to minimize the inventory investment. What is customer services? Customer service is a company’s ability to satisfy the needs of its customers. When we talk about customer service in inventory management, we mean whether or not a product is available for the customer when the customer wants. In this sense, customer service measures the effectiveness of the company’s inventory management. Customers can be either external or internal: any entity in the supply chain considered a customer. Percentage of orders shipped on schedule is a good measure for finished goods customer

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