Minimizing Inventory Cost

In an economy of hyperinflation it becomes imperative for business firms, large or small, to gain control over their costs. Even a slight increase in costs; i.e., costs as a percent of sales, can spell the difference between solvency and bankruptcy. The literature in the field has cast but a cursory glance at specific cost minimization. Authors have concentrated on general rules of thumb to define cost minimization or cost efficiency. While these rules may have been sufficient with past inflation rates, they may not be appropriate at today's rates. An area where improvement of controls will produce lucrative returns is inventory. The problem of inventory levels plays an important role in most organizations. It not only involves a large portion of the investment dollar, but also one of multiple relationships to various activities.