Stock Management

Christopher Williams
Business Studies
Friday, May 10, 2002

Q. (a) Why is it important for a firm to ensure efficient stock management? (b) Outline and evaluate methods of stock management which firms use.



Stock management is defined as the control of stock to ensure that it is adequate for immediate needs without using up excessive financial resources. Stock costs are an important aspect of a firm’s overall costs. This means that firms ensure that efficient stock management is used. Hence any proficient method of stock management used to reduce the cost of holding stock increases profitability and that is a major objective of any firm.
Firms understand that they have to incur an expense to hold stock but this will ensure that the business can remain functioning. So the central aim of stock management is to effectively minimize the cost to stockholding while allowing the business to operate smoothly by retaining sufficient stock.
A firm must ensure efficient stock manag...