A STUDY ON INVENTORY MANAGEMENT

Abstract

There exits an inseparable relationship between finance on the one hand and production, marketing and other functions on the other. Almost all kinds of business activities, directly or indirectly, involve the acquisition and use of funds. For example, responsibility of the production department; but it requires payment of wages and salaries and other benefits, and thus, involves finance. Similarly, buying a new machine or replacing an old machine for the purpose of - -increasing productive capacity affects the flow of funds. Sale promotion policies come within the purview of marketing, but advertising and other sales promotion activities require outlays of cash, and therefore, affect financial resource.
Where then is these preparation between production and marketing functions and the finance function of making money available to meet the costs of production end and marketing operations? Where do production and marketing functioned and the finance functions begin? There are no clear-cut answers to these questions. The finance function of raising and using money although has a significant effect on other functions, yet it needs not necessarily limit or constraint the general running of the business. A company in a tight financial position will, of course, give more weight to financial considerations, and devise its marketing and production strategies in the light of the financial constraint. On the other hand, management of a company, which has regular supply of funds, will be more flexible in formulating its production and marketing policies. In fact, financial policies will be devised to fit production and marketing decisions of a firm in paretic.v