How to handle inventory problems

Management of the inventory is important because inventory involves the blockage of huge funds. So, for that reason, we should know how to handle inventory problems. Inventory cannot be of bulk nor it can be very slim.

Because both alternatives have serious consequences. Inventory mostly occurs for slow-moving stocks cumulatively causing overstock as a problem for the small businessman.

These problems are viewed from two angles: avoiding being overstocked and liquidating slow-moving inventory.

How to handle inventory problems


Avoiding Being Overstocked

  1. A model stock may be planned in units and then translated into financial terms it may be planned in amount and then translated into units.
  2. Both instinctive and controlled buying have advantages and disadvantages, but controlled buying, backed up by instinct and experience, is the best.
  3. The six-month merchandise plan is the basis for controlled buying because it tells how much money one can spend in any given period,
  4. Merchandise should be ordered according to the customers’ rigidity factors.
  5. Although model stocks never materialize, they are important because they permit the small business person to control buying, reduce buying errors/and maintain an effective open-to-buy position
  6. Model stock planning gives customers the best possible merchandise assortments for the cost/price one plans to spend on inventory.
  7. One should plan one’s model stock placing as soon as possible after a season ends.
  8. One should remember that model stocks are only guided to buying and should be revised when one sees the actual merchandise.

Liquidating slow-moving inventory

  1. Make traffic obstacles to a large display of the items.
  2. Offer special discounts for quantity purchases.
  3. Use specially colored price tags.
  4. Offer “special of the day” items.
  5. Advertise closeout items
  6. Put specially colored lights on displays.
  7. Offer two-for-one sales.
  8. Place slow-moving goods next to bestsellers.

It is wiser to avoid creating a disease rather than a disease that is allowed to develop and made aggressive efforts to cure that.

A small business entrepreneur should therefore remain careful not to allow filing up inventories but rather make efforts to liquidate filed up inventories.

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