Types of inventories

- In the 1980s, a popular business book explained that the goal of a just-in-time philosophy was zero inventory. Every manager in America jumped on this idea of holding no inventory. In theory, this means only having inventory needed to meet specific customer orders, just-in-time. But in practice, those managers discovered that you do indeed need inventory. Zero is not the answer. The key is to manage your inventory to the lowest level possible while still meeting your customer's needs. And the first step to managing inventory is to understand the different types of inventory, because all inventory is not the same, you want to manage each type in a slightly different manner. There are four basic types of inventory. I've included a handout that outlines each type for you to follow along. First, there is cycle inventory which is the inventory needed to meet customer demand. There are four categories of cycle inventory,…