Formulas and analysis are used in several inventory management strategies to plan stock. Others rely on standard operating procedures. All of the strategies are designed to increase accuracy. The tactics that a corporation employs are determined by its needs and inventory.
- ABC Evaluation: This approach works by determining which stock types are the most and least popular.
- EOQ (Economic Order Quantity): This formula calculates how much inventory a company should acquire in order to save money on storage and other expenses.
- FIFO (first in, first out) and LIFO (last in, first out): The term “first-in, first-out” (FIFO) refers to the practice of moving the oldest stock first. Because prices always climb, last-in, first-out (LIFO) considers the most recently purchased inventory to be the most expensive and is also sold first.
- Just-In-Time Inventory (JIT): Companies employ this strategy to keep stock levels as low as possible before restocking.
- Lean Manufacturing: This methodology focuses on removing waste or any item from the manufacturing system that does not add value to the consumer.