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Business Arithmetic — Entrepreneurship STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipBusiness Arithmetic3 Marks
Question
Why is inventory control essential for an enterprise?
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Answer

The process of inventory control gives direction to the entrepreneur to take important decision about the various activities like production line and use of material in the business.
It is very essential for the enterprise:
  1. To ensure efficient, effective and optimum use of raw materials.
  2. To know the availability of resources for production.
  3. To ensure and make efforts to purchase raw materials in bulk to get quantity discounts.
  4. To ensure that delivery of finished materials to customers are prompt and not being delayed.
  5. To stabilize the fluctuation of demands. Thus we can say that it is an important tool in the hand of enterprise.

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