The main objectives of inventory management is to maintain inventory at appropriate level to avoid excessive or shortage of inventory because both the cases are undesirable for business. Thus, management is faced with the following conflicting objectives:
(1) To keep inventory at sufficiently high level to perform production and sales activities smoothly. (2) To minimize investment in inventory at minimum level to maximize
profitability. (3) To ensure that the supply of raw material & finished goods will remain continuous so that production process is not halted and demands of customers are duly met.
(4) To minimize carrying cost of inventory.
(5) To keep investment in inventory at optimum
level.
(6) To reduce the losses of theft, obsolescence & wastage etc.
(7) To make
arrangement for sale of slow moving items. (8) To minimize inventory ordering costs.