Inventory management is key to bigger and better
margins. To a CFO, inventory is often a line item on the
balance sheet that measures inventory turns against the
income statement (cost of goods sold). This COGS
analysis provides an overall view of how much inventory
is held across the company’s supply chain. What it
doesn't provide, however, are the reasons why the
inventory is there in the first place or whether the
return on each inventory dollar is sufficient. Is there
too much inventory at the store? Is there too little at
the warehouses? Answers to these questions begin with
understanding what drives inventory levels. pdf. 2007