FINANCIAL OBJECTIVES

FINANCIAL OBJECTIVES: - The Financial objectives of Inventory management is further divided as follows –

·         Economy in purchasing: - Proper inventory management system brings certain advantages and economies in purchasing the raw materials. Management makes every attempt to purchase raw materials in bulk quantity and to take advantage of favorable market conditions.

• Optimum investment and efficient use of capital: - The primary objective of inventory management, from financial point of view, is to have an optimum level of investment in inventories. Inventory management has to setup minimum and maximum levels of inventories to avoid deficiency or surplus stocks.

• Reasonable prices:- Inventory management has to ensure the supply of raw materials at a reasonable low price, but without sacrificing the quality it helps to reduction of cost of production and improvement in the quality of finished goods in order to maximize the profits of the organization

• Minimizing the costs: - Minimizing inventory costs such as handling, ordering and carrying costs etc is one of the main objectives of inventory management. It helps in reduction of inventory costs in a way that it reduces the costs per unit of inventory and there by reduction of total cost of production.