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
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This is a good point. Being able to purchase the inventory required to raise the levels for the holidays is tough to do right now. Maybe companies should be planning ahead and raising inventories slowly in the months leading up to big holidays like christmas, or just revamp their entire inventory process to allow room, or extra money, to accomodate the holiday rush. My guess is they are doing the same thing they always have and didn't really plan on having to up inventories in the middle of a recession with credit at a premium. What do you think?
-Mark Brislin
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