RRL To Be Paraphrased

Inventory management is a vital operational management tool integrated within a supply chain.
It is
essentially used to handle the inventory of a business through a systematic approach that can help
reduce cost for holding one. Bhasin (2019) states that inventory management is the process of tracking
the stock of various products. Businesses, whether they produce services or goods, can integrate an
inventory system for storing their tools, equipment, supplies, raw materials, and products. While
inventory management is mostly employed in large businesses due to its flexibility in the movement of
goods, it can also benefit other businesses such one as small as micro business. RA 9178, also known as
Barangay Micro Business Enterprises Act of 2002, defines micro businesses as any business entity that
produces, processes or manufactures products or services, whose total assets are not more than three
million pesos. Micro businesses in the Philippines cover sari-sari stores, carinderia, laundry shops,
computer shops, printing shops, street food stalls, canteens, mini shops, and ukay-ukay among others.
Stevens (2019) laid out in her article about the importance of inventory management that inventory
management tools such as point-of-sale (POS) systems, bookkeeping systems, accounting systems, and
customer relationship management systems, can also be integrated to aid the business in its day-to-day
operations. These tools require application of technical skills for it to effectively work. Other inventory
tools that are very common and may be employed in the micro business setting include just-in-time
inventory management, safety stock inventory, FIFO/LIFO, batch tracking, perpetual inventory
management, demand forecasting, and bulk shipments. According to Walts (n.d.), inventory
management is only as powerful as the way one uses it, thus knowing these techniques and inventory
management features will help business owners utilize their inventory. The primary goals of inventory
management are to achieve smooth fulfilment of orders, reduce losses due to theft, wastage, and etc.,
know when to scale or shrink production of goods, clear-off the slow-moving goods, and analyze product
sales patterns (Bhasin, 2019). Inventory management can therefore be one of the crucial determinants
of competitiveness as well as operational performance of small and medium enterprises (SMEs). It also
provides better customer service, and prevent loss from theft, spoilage and returns. In a broader
context, inventory management also provides insights into the financial standing, customer behaviors
and preferences, product and business opportunities, future trends, and more.
For every product, the company has to choose a price. Price is the amount of money charged for goods
or services, or the amount of value that customers exchange for the benefit of owning or using goods or
services (Kotler, 2016). Price has a direct impact on company profits, a small percentage increase in price
can result in a large percentage increase in profitability (Kotler & Keller, 2016). But determining the price
can take many ways. Most importantly, it should follow a predetermined strategy. 3 major pricing
strategies can be identified: Customer value-based pricing, cost-based pricing and competition-based
pricing (Maximilian. 2015). Customer value-based pricing is based on the perception of price
determination of the value of the buyer, not the seller's expense. Effective customer-oriented pricing
involves understanding how much value consumers place on the benefits they receive from the product
and setting a price that captures that value. Cost-based pricing is the pricing based on cost of
production, distribution and sale of products plus a fair rate of return for the effort and risk. The costs
calculated here are in the form of fixed costs, which are costs that do not differ from production or sales
levels. Competition-based pricing involves pricing based on competitors’ strategy, costs, pricing, and
market offerings. Consumers will base their judgment about the value of the product on the price
competitors charge for similar products (Kotler, 2016). According to (Hinterhuber and Liozu, 2012)
pricing of goods and services determines the level of profitability and the general liquidity experienced
by firms. Customers’ perceptions of the product’s value set the price ceiling. If customers perceive that
the product’s price is higher than its value, they will not buy the product. On the other extreme, product
costs set the price floor. If the product’s price is lower than its costs, the company will make losses
(Maximilian. 2015)
Financial performance is key to every business’s growth and survival as finance serves as the business’s
operating blood. Financial performance measures (FPMs) play a paramount role in the productivity and
efficiency of small and medium enterprises (SMEs). Use of financial indicators as a measure of
organization’s performance is conventionally most commonly exercised accounting tool as it based on
the principle of profitability which is one of the significant measureable goal of a firm (Kaplan &
Atkinson, 1998). There are several financial indicators that are used as evaluation criteria in assessing
the financial performance like profitability, sales revenue, growth and efficiency

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Inventory management is a vital operational management tool integrated within a supply chain.

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