Monday, August 11, 2008

Inventory cycle

The inventory cycle, from order to delivery, involves the flow of both information and material. Information is initially generated from your sales forecast. As the inventory cycle advances, information is generated from the receipt of sales orders and the placement of purchase orders to your suppliers. Material flow is the movement of raw materials into your company that are processed into finished goods. The material flow cycle ends with the movement of finished goods to your end-user. If you are a manufacturer, your inventory consists of three basic types of inventories: raw materials, work in progress, and finished inventory. Each of these types represents the various stages of completion of your product as it works its way through the manufacturing and assembly processes. If you are a retailer or wholesaler, you deal only with finished goods inventory.

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