Question 1
Inventory management for the store is important with regards to helping it operate at a low-cost for a high profit margin (Moyer, 2014) . Holding a large inventory of shoes for the store will cause its customers to be well satisfied, and is therefore a sound business decision. Notably, with a large pool of shoes in the store, visiting customers will then be a position to access an unlimited supply of products, and will consequently be satisfied from the same. As such, they could choose the shoe that best suits their tastes and preferences, without quite feeling that the store is offering less of it. Having an extra inventory either in storage or a nearby distribution center will go towards ensuring that there are enough shoes from which visiting clients can in turn make their selections.
Markedly, holding a large inventory of shoes prepares the company for increased sales (Moyer, 2014) . One problem that was evident was the lack of enough shoes. That said, having abundant shoes in place will help the store meet the needs of the clients since there is more than enough supply. Additionally, it can assist the company to get ready for sales periods especially in seasonal demands, for example, during the holidays when people love to spend on gifts and clothing. Thus, keeping an inventory is advantageous for the business to increase the sales.
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Question 2
In this case, first in, first out (FIFO) and last in, first out (LIFO) have no effect on the actual physical flow of items in the inventory, and therefore also have nothing to do with them (Powers & Needles, 2012) . This is because shoes, which are the items involved in this case, are not subject either to depreciation or to expiry. Besides, the flow of inventory will in this case highly be determined by the purchases that each individual customer chooses to make, deeply in line with his/her own personal preferences. On the contrary, the weighted average will affect the physical flow of shoe inventory. This is because the items are evaluated based on its relative importance.
References
Moyer., C. (2014). Contemporary Financial Management . Cengage Learning.
Powers, M., & Needles, B. (2012). Financial accounting . [Mason]: South-Western, Cengage Learning.
