Initially, in one week the company will produce n3 times and raw materials are purchased only during the production process. If every production company buys raw materials, there are many costs that will increase. The first is transportation costs because in one week there will be a 3 x transportation cost of raw materials from the supplier, what is the transportation cost in one month? The procurement process that is only carried out during production will not cause storage costs but the effect will increase the cost of transportation. If the company chooses the procurement of raw materials once a month and during that time there are several production processes, the problem is the cost of storage. It is impossible for the raw material in one month to be placed outside the house; of course, there is a separate place to store it, which is http://www.self-storage-hk.com/.
The procurement of goods will cause the cost of moving goods because when processing orders for goods, the company will be charged the cost of moving goods by the supplier. The cost will be greater if the goods or raw materials purchased are increasing. The process of moving these items is also influenced by the distance of ordering with suppliers. The farther the distance between the company and the supplier, the greater the cost of moving goods to be issued. If the company invests in the form of a sufficient amount of inventory then it is when a company must return the capital in the form of inventory to be reprocessed. Capital in the form of inventory in the company will be used for production processes or company operations. With the production process, the company can increase its capital to return the inventory used previously.
In industrial companies, there are several things that can be done for inventory management. The focus of inventory management will facilitate operational processes within the company. Before the company takes advantage of inventory, consideration will be given to how much inventory must be considered by the company. Calculating the amount of inventory needed by the company is very appropriate because it avoids unused inventory in the warehouse. Too much stockpiling of inventory will reduce the company’s desired profit.