Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VII. Short-Term Financial Planning and Management

21. Credit and Inventory Management

© The McGraw-Hill Companies, 2002

PART SEVEN Short-Term Financial Planning and Management

Inventory types. We described the different inventory types and how they differ in terms of liquidity and demand.

Inventory costs. The two basic inventory costs are carrying and restocking costs; we discussed how inventory management involves a trade-off between these two costs.

Inventory management techniques. We described the ABC approach and the EOQ model approach to inventory management. We also briefly touched on materials requirements planning, MRP, and just-in-time, or JIT, inventory management.

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