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    Return On Investment (ROI) Different Kinds of Inventories - : Profit After Tax / Total Asset

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    Return On Investment (ROI) Different Kinds of Inventories - : Profit After Tax / Total Asset

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    Sayed Md Abdullah Al MuBin
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    na

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    Return On Investment (ROI) Different Kinds of Inventories - : Profit After Tax / Total Asset

    Uploaded by

    Sayed Md Abdullah Al MuBin
    na

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Inventory management

    Return On Investment (ROI) = Profit After Tax / Total Asset

    Different kinds of inventories -

     Raw materials and purchased parts (Clay used in tiles production firms)

     Work in Progress - WIP (Tiles under production)

     Finished good inventories (Ready tiles)

     Replacement parts, tools and supplies (Replacing defective tiles)

     Goods in transit to warehouses or customers - Pipeline inventory (Tiles for sale)

    Inventory Counting System

    Periodic System

    Perpetual Inventory System

    Two-Bin System

    Universal Product Code or Bar Code

    1. **Inventory Counting System:**

    - **Explanation:** Inventory counting systems involve periodically counting and recording the
    quantity of goods or materials on hand to ensure accurate records.

    - **Example:** A retailer conducts a monthly physical count of all items in its warehouse to compare
    with the recorded inventory levels in the system.

    2. **Periodic System:**

    - **Explanation:** In a periodic inventory system, businesses update their inventory records at specific
    intervals, rather than continuously tracking changes in real-time.

    - **Example:** A small business might perform a physical inventory count at the end of each month to
    reconcile with the recorded levels in the accounting system.

    3. **Perpetual Inventory System:**

    - **Explanation:** The perpetual inventory system involves continuously updating inventory records
    in real-time as goods are bought and sold. It provides a real-time view of stock levels.

    - **Example:** A large online retailer uses a perpetual system to instantly update its inventory
    database when a customer places an order or when new stock is received.
    4. **Two-Bin System:**

    - **Explanation:** In a two-bin system, two containers hold inventory items. When the first bin is
    empty, it signals the need for replenishment, ensuring a constant supply without the risk of stockouts.

    - **Example:** An automotive repair shop uses a two-bin system for essential spare parts. When the
    first bin is empty, mechanics know to reorder parts to avoid delays in servicing vehicles.

    5. **Universal Product Code (UPC) or Bar Code:**

    - **Explanation:** UPC or barcode systems use unique codes assigned to each product for quick and
    accurate identification. Scanners read these codes to streamline processes like inventory tracking and
    point-of-sale transactions.

    - **Example:** A grocery store uses barcodes on product packaging. When a cashier scans the
    barcode at checkout, the system automatically deducts the item from inventory and updates sales
    records.

    ABC classification

    A Category Items Comprise 20% of SKU & Contribute to 70% of $ spend.


    B Category Items Comprise 30% of SKU & Contribute to 25% of $ spend.
    C Category Items Comprise 50% of SKU & Contribute to 5% of $ spend.

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