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The taking of a physical inventory, while apparently a simple process, presents several intricacies that lead many factory managers into trouble, and, in a large percentage of instances, the figures obtained are too dubious for general use. In the following Report, the procedure is set forth for taking an inventory the results of which will be accurate and reliable for all purposes. Having obtained correct figures, it is a problem in many plants how to keep them up to date. The solution lies in a perpetual inventory system. Such a system is one of the earmarks of a progressive concern. While some factory managers have found that they could dispense with the physical inventory, it has been the experience of most men that it should not be discarded upon the adoption of a perpetual inventory system. By maintaining it in some form a powerful basic check will be established on the accuracy of the system and progress made toward its ultimate perfection.

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Modern business report no. 1; Originally published by: Alexander Hamilton Institute



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