Currently, companies are looking for tools that contribute to the good management, direction and control of inventories. In this way, accurate accounting information is obtained, through the formulation of financial statements, which allow obtaining excellent results.
One of the fundamental bases of any company or organization are the relations of purchase and sale of goods, especially for those whose activity requires the implementation of the inventory, which requires the control, valuation and registration of the merchandise.
What is it and what are the types, methods and models for inventory management or control?
The inventory can be considered as one of the most complex logistics issues in terms of registration, control and valuation of the goods and services offered by a company. This allows a detailed record of the current availability of working capital.
It also allows for certainty, establishing the need to decide how much goods to supply to meet future demands. The amount of inventory will depend on the amount of resources available for purchase.
A lack of inventory control could cause unrealistic data to be provided on the quantity of the merchandise, causing the financial statements to be unreliable.
Importance of inventory valuation
The inventory is a method of control of the entrances and exits of the merchandise, its importance lies in the fact that it provides a view that allows classifying the most commercial, the most expensive, the least commercial and the cheapest products. In this way it allows thinking and learning the quantification of each type of product that is needed.
The foregoing determines whether the goods or services that are being marketed present economic feasibility, in the event that this is not the case, adjustments are automatically made.
Inventory valuation methods
Inventory valuation methods are not only focused on the physical movement of merchandise, but also take into account costs and prices on account of economic and tax controls.
Companies have the decision to choose which method best suits their needs. An inventory control system is applied in economic correspondence, relative to each product.
There are many methods for carrying out inventories, among which are considered: weighted average, first in first out “PEPS” and the hybrid method.
The weighted average calculates a unit amount, which results from dividing the total cost of acquiring all products purchased for sale, by the number of products available for sale. For the second method, importance is established for cost allocation.
The hybrid method consists of making basic decisions, related to the definition of the order quantity and the definition of the order point; it has the advantage of being able to be applied to any probability distribution, on which there is demand
Models for inventory management
The models authorized by the general accounting regulations include the verification of stocks that reveal the value of inventories in the financial statements. One of them consists of knowing their value at any time, and is called: permanent inventory.
Therefore, there is the periodic model, which is used to constantly define the cost of inventory, running a count of available stocks, to determine the number of products that are available at the end of an economic period.
There are also rotating inventories, which consist of carrying out continuous physical counts, without interruption in the company’s activities. There are also ABC inventory models; which show that most of the value of the investment in availability corresponds to a reduced number of products.
Proper inventory control is one of the best accounting tools; to obtain efficient and timely accounting information. So that the financial statements allow the management of the company to make the best decisions, in favor of the financial well-being of the company.
In the same way, it provides a streamlining of the quantification of the merchandise, which does not hinder the daily operations of a company; providing a better administration of the economic resources of the same.
