Inventory Management is “the practice of planning, directing and controlling inventory so that it

contributes to the business' profitability”. Inventory management can help business be more profitable
by lowering their cost of goods sold and/or by increasing sales.

Inventory Management is “making sure that items are available when customers call for it, but not too
much stock so that inventory turnover goals are met” - Juhi

Inventory Management it is the process of efficiently overseeing the constant flow of units into and out
of an existing inventory ( Valix et. al 2012)

The first in, first out (FIFO) method of inventory valuation is a cost flow assumption that the first goods
purchased are also the first goods sold. In most companies, this assumption closely matches the actual
flow of goods, and so is considered the most theoretically correct inventory valuation method. The FIFO
flow concept is a logical one for a business to follow, since selling off the oldest goods first reduces the
risk of obsolescence.

Economic Order Quantity (EOQ) is the order quantity that minimizes the total holding costs and ordering
costs. It is one of the oldest classical production scheduling models. It applies only when demand for a
product is constant over the year and each new order is delivered in full when inventory reaches zero.
There is a fixed cost for each order placed, regardless of the number of units ordered. There is also a cost
for each unit held in storage, commonly known as holding cost, sometimes expressed as a percentage of
the purchase cost of the item.

We want to determine the optimal number of units to order so that we minimize the total cost
associated with the purchase, delivery and storage of the product.

First in, First out (FIFO) this is in accordance with the ordinary merchandising procedure that the goods
are sold in the order they are purchased ( Valix et. al 2012) In the study, it is one of the inventory
valuations in determining the cost of the product.

Safety Stock it refers to the variability is present in demand or lead time, it creates the possibility that
actual demand exceed expected demand. Consequently, it become necessary to carry addition
inventory, to reduce the risk of running out of inventory ( a stock out ) during lead time. ( Stevenson
2010 )

Reorder point the inventory level (point) at which actions is taken to replenish the stocked item. (Jay
Heizer & Barry Render 2010)