Inventory and Storage

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Inventory and Storage
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Lesson Objectives

• Define storage
• Identify reasons for storage
• Identify types of warehouses

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STORAGE

• The function of holding goods until they are sold

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Why use storage?

• To await orders from purchasers
• Production has outpaced consumption
• To stabilize prices (agriculture)
• Goods bought in quantity for discount
• Faster delivery to customers (location)

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WAREHOUSE

• Facility where goods are received, identified,
  sorted, stored and prepared for shipment

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Private Warehouses

• Owned by a business for its own use

http//www.rytway.com/pictures.htm
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Public Warehouses

• Facilities available to any business (or person)
  for a fee

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Distribution Center

• Facility that focuses on MOVING goods rather than
  storing.

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Publix Distribution Center
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Bonded Warehouses

• Public or private
• Goods not moved until tax paid
• Cigarettes
• Alcohol
• Firearms

• For goods that require payment of federal tax

http//campbellsshipssupplies.com/CampBond.asp
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Inventory and Storage
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Stock Control Techniques

• Inventory Turnover
• Number of times average inventory has been sold
  and replaced in a period of time
• High turnover rate
• Goods selling quickly
• Higher profit

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Inventory Turnover Calculation
Net Sales (retail dollars)_ Average Inventory
on hand (retail dollars)
Net sales 49,500 Average inventory 8250
49,500 / 8250 6
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Sample Problem
Month Inventory Net Sales
January 50,000 10,000
February 55,000 15,000
March 68,000 20,000
April 64,000 19,000
May 63,000 21,000
June 60,000 20,000
TOTAL 360,000 105,000
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Sample Problem Answer
Average Inventory Total inventory / 6 months
360,000 / 6

60,000 Turnover Rate Net
sales / Avg. Inventory 105,000 /
60,000 1.75