Merchandise Inventory Control

1. Have you organized your store into selling departments or classifications?

Organizing your store by merchandise types enables you to determine not only the profitability of groups of merchandise but also the abilities of your employees. Department records should include gross sales, customer returns and allowances, semi-annual physical inven­tories, purchases at cost and retail, markdowns, direct department expenses, cash discounts, and workroom costs. With these data you can construct department operating statements to enable you to determine controllable profit levels. Your department records are also necessary for proper supervision of your employees.

2. Do you keep sales, inventory, and purchase records by types of merchandise within your departments?

Analysis of dollar sales, inventories, purchases, and markups and markdowns of merchandise by type is indispensable if you want to balance your inventories and purchases to sales and if you want an adequate markup. Sales and purchases by types of merchandise can be reported as they occur, or sales can be derived periodically by subtracting the current physical retail inventory for each type of merchandise from the sum of previous physical inventory and purchases at retail.

3. Do you control your purchases in dollars by means of an open-to-buy system?

The open-to-buy is a measure of how much merchandise at cost or retail to introduce into stock during a control period, such as a month, in order to "land" your stock at the end of the period at a predetermined level. It is calculated by adding your planned sales for the period to your planned closing inventory and subtracting the sum of your opening stock and the merchandise on order at the beginning of the period that is scheduled for delivery during the period.

4. Within each merchandise type, do you develop a model stock plan for key points of time in the season in order to maintain a balance between breadth and depth of the assortments?

Your merchandise records will have no value unless you act upon them. You can use such records to develop a unit plan which will show the number of different varieties you should carry in stock and the number of each variety you should maintain to avoid running out. A model stock should be broken down by customer preference factors such as price lines, types, materials, colors, and sizes. Even if you do not keep unit control records, you can visually inspect your stock to see whether assortments are well thought out or have been developed haphazardly.

5. For staple and reorder items, do you prepare a checklist (never-out list) which you frequently check against the actual assortment on hand?

Avoid being out of staple items. For each item determine your unit requirements by estimating your sales during the sum of the normal delivery period and of a scheduled reorder period, such as every two weeks. Add a little extra for safety. From the total units thus calculated, subtract the number of pieces now on hand and on order, if any. The difference will represent the proper reorder quantity.

6. Do you have a unit control system for fashion lines that shows best-sellers and slow-sellers daily and weekly?

The control system may be a daily analysis of sales in units, by style number, size, and color; or it may involve keeping a record of the transfer of goods from reserve to forward stock.

7. Do you make certain that best-sellers are reordered promptly and in sufficient volume and that slow-sellers are processed swiftly for clearance?

Unit control records are useless unless they are used promptly in both buying and selling activity. When you sample a new novelty or style number, be sure that a quick reorder can be obtained promptly. Some merchants lose a great deal of potential business because they do not reorder promptly before the initial supply is sold out or because the delivery period for reorders is very long.

8. When you go to market or place orders at home for seasonal merchandise, do you use a written buying plan to guide your selection?

A buying plan - the outgrowth of a sales and model stock plan - is developed by such factors as price line, type, and material. It includes a scale to help determine the selection of sizes and colors. It does not normally include specific style numbers (which are determined at the time and point of purchase), but it may include the number of different styles you decide to carry, and the number of colors and number of sizes.

9. Do you use a reliable system for determining and controlling slow-selling stock?

Such a system might involve a periodic check of all items or it might be based on a perpetual inventory record that would reveal which items are not moving. Your control records should show the date the merchandise was received; and when you take inventory, you should note the value of goods in each age bracket-that is, less than 6 (or 3) months old, 6 months to 1 year old, and more than 1 year old.

10. Do you keep separate, in records and in stock, those goods which do not belong to the store, such as a customer's own goods and goods on consignment?

Legally, you are a consignee for the goods of others and have a special responsibility.

11. Do you determine the amount of your merchandise shortages at least twice a year?

By comparing your actual physical inventory with your "book" inventory, you can determine the amount of your stock shortage. Shoplifting by outsiders and pilferage by employees have reached alarming proportions. Your store may not be exempt from such losses. Consult your accountant on how to determine the amount of your "book" inventory.

12. Are you taking adequate safeguards to reduce shoplifting and pilferage in your store?

You should strive to develop in your employees a sense of loyalty and responsibility that will keep them alert to any evidence of theft. Instruct your employees in how to handle people they suspect of shoplifting. Arrange the layout of your store so that the actions of customers can be readily observed. Cooperate with other merchants and the police in apprehending shoplifters. Hiring an outside protection service to watch selling areas is also worth considering.

Everyone Requirements To be knowledgeable about the Decision Making Process. We all rely on advice, and techniques or tools, to
help us in our daily lives.

When we go out To eat, the restaurant menu is the instrument which provides us with the information required to choose what to
purchase and how much to spend.

Running a Business also requires making decisions using techniques and information - how much stock to preserve, what price to
sell it in, what credit arrangements to provide, just how many people to employ.

Decision Making Process in business is the systematic process of identifying and solving problems, of asking questions and finding
answers. Decisions usually are made under conditions of uncertainty. The future is not understood and sometimes even the past is
suspect. This manual opens the door for business owners and managers to find out about the variety of techniques that may be
utilised to boost your decision making process in a world of doubt, change, and uncontrollable circumstances.

A General Approach to Decision Making Process. If or not a scientist, or an executive of a significant company, or a small
business owner you can gain from improving your decision making skills. The overall approach to systematically solving issues is
the same. The next 7 step approach to better management decision making can be utilized to study nearly all issues faced by a
business enterprise.

State the problem. A issue first has to exist and be recognized. What is the problem and why is it a issue. What's ideal and how
can current operations vary from this ideal. Describe why the symptoms (what is going wrong) and the causes (why is it likely
wrong). Attempt to specify all terms, concepts, factors, and relationships. Quantify the issue to the extent possible. In case the
problem, not accurately and quickly filling customer orders, then attempt to ascertain just how many orders were incorrectly full
and the length of time it took to fulfill them.

Define the Objectives. What are the goals of the study. Which objectives are the most crucial. Objectives usually are stated by an
action verb like to reduce, to grow, or to enhance. Returning to the customer dictate problem, the significant goals would be: 1)
to raise the proportion of orders filled properly, and 2) to decrease the time it takes to process and order. A sub-objective
could include to simplify and streamline the order fulfilling procedure.

Grow a Diagnostic Framework. Next set a diagnostic frame, that is, decide what approaches will be utilized, what kinds of
information are required, and also how and where the information is available. Is there going to be a consumer questionnaire, a
review of company documents, time and motion tests, or something else. What are the assumptions (facts supposed to be correct) of
the study. What are the standards used to evaluate the study. What time, funding, or other constraints are there. What type of
qualitative or other special techniques will be used to examine the data. (Some of that will be covered shortly). In other words,
the diagnostic frame establishes the extent and processes of the entire study.

Collect and Analyze the Data. The next step is to gather the data (by following the procedures created in Step 3. Raw data is then
tabulated and coordinated to facilitate analysis. Tables, graphs, charts, indicators and matrices are some of the standard ways to
organize raw data. Analysis is your critical requirement of audio business decision making. What does the data reveal. What facts,
patterns, and trends can be viewed from the information. Many of the qualitative methods covered under may be used during the
measure to ascertain facts, patterns, and trends in data. Obviously, computers have been used widely in this measure.

Generate Alternative Solutions. After the analysis has been completed, some specific conclusions about the nature of the issue and
its resolution must have been reached. The next step is to develop alternative solutions to the issue and rank them in order of
the net benefits. But how are alternatives best generated. Again, there are several well established techniques such as the
Nominal Group Method, the Delphi Method and Brainstorming, amongst others. In these methods a group is included, all people who
have reviewed the data and analysis. The method is to have an informed group indicating a variety of feasible solutions.

Develop an Action Plan and Implement. Pick the ideal solution to this issue but be sure to understand clearly why it is best,
which is, the way that it accomplishes the goals created in Step 2 greater than its options. Then create an effective method
(Action Plan) to implement the solution. At this stage a significant organizational consideration arises - who will be responsible
for seeing the implementation through and what power does he possess. The selected manager should be responsible for seeing that
all deadlines, tasks, and reports have been performed, met, and composed. Details are all important in this measure: reports,
programs, activities, and communication are the key elements of any action program. There are lots of techniques available to
decision makers implementing an action plan. The PERT method is a method of setting out an whole period like an action program.
PERT will be covered soon.

Evaluate, Obtain Feedback and Monitor. After the Action Plan has been implemented to Fix a problem, management has to evaluate its
own effectiveness. Evaluation Standards have to be determined, feedback stations developed, and monitoring performed. This Measure
should be performed after 3 to 5 weeks and at 6 months. The target is to answer the main point question. Has the issue been
solved?

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