Inventory List is a way to gain more control over the business inventory so that the utilization of the inventory can be done in an efficient manner, where the list contains the details regarding opening stock, purchases, closing stock etc of all the types of inventory used by the company.
Inventory List Definition
Inventories list is a mechanism to exercise more control over the inventory of a business entity so that the inventories can be utilized efficiently. It is usually made in an orderly fashion where it is simply represented as a list of stock items with details about each line item. Nowadays, most of the inventory management is done through computer software which makes such data-intensive tasks bearable.
The inventories list is updated at variable frequencies depending upon the flow of inventory or turnaround time of the inventory, depending upon the type of business. So if the business entity deals with fast moving items, then the inventories list needs to be updated daily, or if the inventory push out is sluggish, then it may be updated on a weekly or monthly basis as well.
Components of Inventory List
Though there no exact format for an inventoryFormat For An InventoryExcel can assist in creating an inventory template that simplifies inventory management. It is extremely beneficial to large-scale retailers who deal with bulk orders. list, but following could be regarded as components of the inventories list on a generic basis:
#1- Inventory ID
Usually, this serves as an inventory identifier in the inventory controlInventory ControlInventory control is adopted by organizations to properly manage the inventory/stock stored in the course of business to minimize storage & carrying charges for the inventory and satisfy its customer’s demands in the market. to track the status of a particular item in the list.
It represents the name of the item on the list to represent the item.
It represents the detail of the description of the item. It may tell about some specifications of the item that may help in identifying a particular inventory item amongst so many of them, or it may be some type of general description.
#4- Unit Price
It is the purchase price of the item on per unit basis. Sometimes if the item is purchased in different slots at different prices, then it may represent the average unit priceAverage Unit PriceUnit Price is a measurement used for indicating the price of particular goods or services to be exchanged with customers or consumers for money. It includes fixed costs, variable costs, overheads, direct labour, and a profit margin for the organization. of the item as well.
Here goes the total number of units of the particular item on the list. It gives an idea of whether an order to replenish the inventory must be placed with the vendor or not. Every business entity has some type of threshold to
This column is of high importance as it represents the value of the inventory item for all the units present in the warehouse. It also represents a type of budgeting to give a glimpse of how much money is tied up in inventories.
#7- Reorder Level
It depicts the threshold level for each line item on the list. When the inventory quantity goes below the reorder level, then the order is automatically placed with the vendor if the inventory management system is in place in the business entity.
#8- Reorder Time (in days)
It is the expected time between placing the order of a particular inventory item with the vendor and receiving the ordered item.
#9- Quantity in Reorder
It refers to the quantity for which the replenishment order needs to be placed with the vendor. This amount puts back the total quantity to the fulfillment level, which is way above the reorder point.
This column mentions whether the particular item is no longer maintained as an inventory.
Examples of Inventory List
Following are Examples of inventory list:
Inventory List Example #1
Inventory List Example #2
The amount of stock or inventory that is necessary to carry on the business activities depends on the nature and size of the business. It also depends on whether or not the business entity has enough space to store the inventory items, or else it would have to ask the supplier to store at its site in exchange for some fee. Keeping a low level of inventory has advantages like lower storage cost, lesser stock wastage, easy updating stock with the latest products, etc. and disadvantages like loss of business opportunity, dependence on supplier’s efficiency, etc.
Similarly, a high level of inventory has its share of advantages like easy maintenance, always ready to serve clients, lesser average inventoryAverage InventoryAverage Inventory is the mean of opening and closing inventory of a particular period. It helps the management to understand the inventory that a business needs to hold during its daily course of business. cost due to bulk buying, etc. and disadvantages like higher capital tied up, more wastage of inventory, costlier to update inventory, etc. So it all depends on the company’s management policy and flow of inventory as well.
This article has been a guide to Inventories List and its definition. Here we discuss the top 10 components of the inventory list along with examples and explanations. You may learn more about Accounting from the following articles –