Inventory Systems Comparison

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Running head: INVENTORY SYSTEMS

Inventory Systems Summary

Derrick Abrams, Lasonya Jewell-Antoine, Kristin Bachman, Marcia Rhoden-Mccatty

University of Phoenix

QRB 501

August 1, 2011

Inventory Systems Summary

The principal role of inventory management systems is to ensure that stores are adequately stocked. Companies use various methods to track and report inventory. Retail companies are perhaps the best entities to examine when attempting to understand inventory management systems. The type of inventory a company has determines the method they use. Retail companies use the retail inventory method as a base system. Last-in-First-Out (LIFO) and First-in-First-Out (FIFO) are the two systems that appear to be used more …show more content…

COSTCO Wholesale Corporation

Costco has a lot of assets in their inventory system that include merchandise, land,

buildings, and equipment. During the period of 2007 to 2010 it states that business has certainly

improved for this company and in particular this store in Atlanta. They have moved from

thousands of dollars in merchandise inventory to millions in 2010. There are advantages and

disadvantages to that much inventory. The advantages are that the company and their

investors can see growth and stock prices will be on the rise. It also means that sales are

up and more people are coming through the doors of the store.

Some disadvantages are that they will have to hire more employees to man the store,

pay roll goes up, and employee benefits. Due to the risks of theft and burglary, the company

will need to improve their security system to protect a larger inventory. All of these

changes cost money and therefore although COSTCO has increased their merchandise they will

have to make spending adjustments in other areas.

Systems Comparison

Best Buy Co. Inc. and Target Corporation both use the retail inventory method (RIM). Specifically, both companies utilize the LIFO method of retail inventory management. Best Buy and Target experience similar advantages and

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