There is one item that was not mentioned in this thread but does have a serious impact on business's inventories is the tax that the federal government places on them. Companies in all fields have reduced inventories because of this. They stock only the high moving items and leave out the slower moving ones.
Dave
h2so4 There is one item that was not mentioned in this thread but does have a serious impact on business's inventories is the tax that the federal government places on them. Companies in all fields have reduced inventories because of this. They stock only the high moving items and leave out the slower moving ones. Dave
What federal inventory tax? I've looked and can find no such reference. I can only find references to inventory valuation methods as they affect cost of goods sold (i.e. what you subtact from revenue to arrive at gross profit).
http://www.smallbusinessnotes.com/small-business-resources/irs-publication-334-how-to-figure-cost-of-goods-sold.html
Inventory costs money to carry, period. That's a fact of business life. The faster you can turn inventory, the more revenue you generate. The quicker it goes from the loading dock to the customer's hands, the less warehouse space, labor, heating, lighting, real estate, etc. you need and your expenses are minimized.
Quick reference to JIT (just in time) manufacturing. http://www.bsu.edu/web/scfrazier2/jit/mainpage.htm
'Course, the problem with retail is that you need a certain level of inventory to carry on business. However, the principal of rapid inventory turns still applies. However, this whole thread was about manufacturing and not retailing.
Andre