Christmas is quickly approaching and retailers are in the process of raising inventory levels to meet the higher levels of demand. However, with the credit crunch and slowing economy raising inventory levels will be harder this year. According to an article I read, some retailers are filing for bankruptcy because they do not have the resources to pay for their inventory build up. Increasing inventory levels requires a significant amount of money. Some companies have enough cash to pay for it, but many have to take out short term loans to pay for it. The credit crunch has made it even harder for companies to acquire funding for their inventory. I think this is a great example of the important role inventory plays in the operations of a company, and we always focus on determining order quantities and finding the minimum cost, but companies also have to find a way to pay for this inventory.
-Whit Brown
Friday, October 24, 2008
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