Basic types of systems to control inventory
1. Periodic Inventory System: This system involves manually counting inventory at specific intervals, such as monthly or quarterly, to track the amount of inventory on hand.
2. Perpetual Inventory System: This system uses technology, such as barcode scanners and inventory management software, to track inventory levels in real-time. This allows businesses to have up-to-date information on their inventory at all times.
3. Just-In-Time (JIT) Inventory System: This system focuses on reducing excess inventory by only ordering or producing goods when they are needed, based on demand. This helps minimize storage costs and reduce the risk of holding onto obsolete inventory.
4. Economic Order Quantity (EOQ) System: This system calculates the optimal order quantity that minimizes total inventory costs, taking into account factors such as ordering costs, carrying costs, and demand variability.
5. ABC Analysis: This system categorizes inventory into three categories based on their value and importance to the business - A, B, and C. This helps prioritize inventory management efforts and allocate resources effectively.
6. Vendor Managed Inventory (VMI) System: In this system, the vendor is responsible for monitoring and managing the inventory levels at the customer's location. This helps streamline the supply chain and ensure that the customer always has the right amount of inventory on hand.
7. Dropshipping: In this system, the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.