CHAPTER ONE

INTRODUCTION

1.0     Introduction

Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory management is the active control program which allows the management of sales, purchases and payments. Modern inventory management systems must have the ability to track sales and available inventory, communicate with suppliers in near real-time and receive and incorporate other data, such as seasonal demand. They also must be flexible, allowing for a merchant’s intuition and, they must tell a store owner when is time to reorder and how much to purchase.

Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine line between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment. (Tim, 1998).

Inventory to many small and medium business owners is one of the more visible and tangible aspects of doing business. Raw materials, goods in process and finished goods all represent various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a retail store contribute to profits only when their sale puts money into the cash register (Barnes et al., 2009).

In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profits. In fact, many small and medium businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled, they are unreliable and inefficient (Frank et al., 2009).

This study covers the design and implementation of an Inventory control for pharmacy system.

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