Inventory Foresting Models in a Downward Trending Economy

The two articles we read were a discussion of the different ways to forecast and account for the costs of inventory. While each article makes a case for the times the different models should be used, the discussion itself is particularly applicable to times when the world economy is unstable. With today’s 300+ point drop in the Dow industrial average, tight credit markets, and unstable consumer demand; it is even more important than ever for a company to control its costs by any method that works best in its economic situation. The actual model that is utilized to reduce the overall inventory costs is not as important as the actual reduction in costs. A company that can reduce its inventory costs can lessen the strain on its line of credit, free up working capital and give the company greater flexibility to maneuver in a less than favorable economic time, when a less well run company might just fail.