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Essentially it is the search for the optimization of the amount of capital tied down in inventories with the aim of minimizing the amount that does not get utilized during the various production cycles in the fiscal year and therefore becomes a permanently tied down capital that produces no return.
The inventories turnover ratio provides useful indications about this issue.
The overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale. A business's inventory is one of its major assets and represents an investment that is tied up until the item is sold or used in the production of an item that is sold. It also costs money to store, track and insure inventory. Inventories that are mismanaged can create significant financial problems for a business, whether the mismanagement results in an inventory glut or an inventory shortage.
dear Irfan,
I have not been interacting to this sector, so I cannot provide you the pointed answer and also do not want to give the copy paste answers, as this will depreciate myself only.
