Advantages and Disadvantages of INVENTORIES

An inventory is a detailed classification of the material and immaterial assets of a person, company or institution.

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More about inventories

I’m sure you’ve heard the expression “I have to take inventory” from someone who owns a business. In most businesses this is a very common process that is usually done at least once a year.

There are many types of inventories: beginning or ending (depending on timing); anticipation, batch or consignment inventory (depending on logistics); periodic or perpetual (according to the periodicity); in-process or completed inventories (according to the form).

In the following article we are going to present a series of general advantages and disadvantages of inventories.

Advantages over inventories:

  • Order and control. It is a process that brings order, something essential for the proper functioning of any company. In addition, what is ordered is easy to locate.
  • Order and control.
  • Detects losses and theft. If an inventory is taken frequently, theft or losses due to accidents or mismanagement can be detected.
  • It offers a wide variety of information. It shows a lot of information about production levels, helps to know the value of a company and offers other data such as information about the demand curve.

Disadvantages of inventories:

  • Labor-intensive. It requires a large number of workers to perform the process.
  • Large space. Requires large space to store files and documents.
  • Much space required.
  • Long time. Requires a large amount of time.