INTRODUCTION
1.1
Background of the Study
Inventories are
vital to the successful functioning of manufacturing and retailing
organizations. They may consist of raw materials, work-in-progress, spare
parts/consumables, and finished goods. It is not necessary that an organization
has all these inventory classes. But, whatever may be the inventory items, they
need efficient management as, generally, a substantial share of its funds is
invested in them.
Inventory represents an important decision variable at all stages of
product manufacturing, distribution and sales, in addition to being a major
portion of total current assets of many organizations [More, Lee & Taylor,
2003;321]. It many represent 33% of company assets and as much as 90% of
working capital, (Sawaya Jr. and Giauque, 2006:121).
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