What Is Inventory Accumulation?

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Keeping track of your inventory is important so that you can make sure you have enough product to sell to customers. Learn about inventory accumulation with help from a business consultant in this free video clip.

Part of the Video Series: Finance & Business Advice
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Video Transcript

Hi, my name is Alexis Guerreros, I'm a business consultant. Today, I'm going to talk to you about inventory accumulation. Imagine you own a business, and in in that business you sell widgets, now what's important, is you need to make sure you have enough, so that when the orders come in you have to sell. So you're probably going to want to buy some ahead of time, or make some ahead of time. And let's say in your inventory, which is your collection of product that you have available to sell, let's say you have a 100 that's ready to be sold, let's say an order comes in for 50 of them, that leaves you, 50 more to sell. Now say for the next month you can only sell another 25, well that leaves you, 25 in your inventory. Now the problem is, if you can't sell those 25, they're just going to stay in your inventory, and over time if you continue to make a 100, and only sell 75, you're going to continue to have 25 and 25 and 25, and over time you're going to accumulate inventory that you're not going to be able to sell. So it's important just to make sure that you keep an eye on what your inventory is, and maybe do some things to try to sell some more, maybe lower the price or do what you can, because the last thing you want to have is product that you own sitting on shelves and not making any money. Good luck out there.

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