Question

Juan has a retail business selling skateboard supplies he maintains large stockpiles of every item he sells in a warehouse on the outskirts of town he keeps finding that he has to reorder certain supplies all the time but others only once a year how can he solve this problem?

Answer 1

Focus his stock on the most vital items while keeping those that do not sell as well at lower levels.

Answer 2

Focus his stock on the most vital items while keeping those that do not sell as well at lower levels.

Step-by-step explanation:

Juan has a very loose control over her inventory, it is not a good inventory control system to maintains large stockpiles of every item he sells in a warehouse.

She is advised to employ the use of ABC inventory control system. This system is very suitable for business that maintain variety of inventories. All the inventories a categorized according to value and turnover,

Category A - The inventory with the highest value or volume turnover is categorized as A item, the entity must keep a very tight control over such inventory

Category B - The inventories that is next to A in value and volume of turnover fall into this category and the control here may not be as strict as category A but must be more than that of category C

Category C - These are inventories that has a very low turnover and possibly lowest in value also. The lowest control is exercised on this type of inventory.