Purchase Planning and Inventory Management, pp 324-337 Entrepreneurship Mr. Bernstein Purchase Planning and Inventory Management, pp 324-337 May 2017

Entrepreneurship Mr. Bernstein Planning Purchases What will you buy? How much will you hold in stock? How will you time purchases? Who will you buy from? How will you get the best price? Planning Purchases is a primary concern for retail and manufacturing businesses

Entrepreneurship Mr. Bernstein Planning Merchandise Plan Know Inventory Estimated Sales Planned Purchases Planning avoids overspending!

Entrepreneurship Mr. Bernstein Researching Compare Vendors Production Capabilities Shipping Times Past Experiences Minimum Orders Special Services Discounts – Loyalty, Volume Payment Arrangements (ie 2/10 net 30) How many vendors should you use?

Entrepreneurship Mr. Bernstein Evaluating Sales Rates Customer Feedback Evaluate Vendors as well as Products

Entrepreneurship Mr. Bernstein Inventory Management Systems What is the best way for your business to keep track of its inventory?

Entrepreneurship Mr. Bernstein Inventory Management Systems Perpetual Inventory Information typically collected through POS (Point of Sale) system Allows employees to see product availability at all times Manual Data Collection Sales and shipment information collected continually, or periodically (aka Physical Inventory) No upfront or ongoing costs Opportunity for errors Can use a combination of Perpetual and Physical Methods Kanban or Just-in-Time System

Entrepreneurship Mr. Bernstein Inventory Shrinkage Theft (employees) - 49% Shoplifting - 32% Administrative Error – 15% Vendor Fraud – 5% Prevention Education – test on store procedures Planning – plan for dealing with dishonest customers, employees or vendors Security – pre-employment testing