Method retail: what it is, advantages, and disadvantages

There is a way that is simple, efficient and fast designed specifically for calculate the inventory of a store. Then discover the method of retail. 

The inventory helps ensure that a shop to have the right products available at the right time so that the customers can buy when they want to. That is why it is important to use a method that ensures reliable results.

A system of inventory provides the store or group of them a full account of the available items and the monetary value of these products in inventory. The retail price is the value that the consumer pays when buying an item of inventory, therefore, the method retail values the inventory in accordance with this the retail price.

What is the Method of retail?

The method retail inventory is useful for estimating the value of the goods in a shop, as it allows you to calculate the value of total inventory by taking the retail price total of items that were originally in inventory, subtracting the total sales, and then multiplying that amount of money, according to the cost-retail.

The method retail keeps a detailed log of all purchases and goods available with its respective purchase price and the retail price, or the price at which it sells well.

This is achieved by deducting the sales of goods for a specific time period in the value of the goods initials plus the retail value of purchases for the same period, which allows you to set the cost-price of retail.

Its accuracy depends largely on the variety and the fluctuation price of goods sold, as that increases the variety and the price fluctuates more, the accuracy decreases.

The method retail evaluates the ending inventory or cost of goods sold for the organization. This inventory system also requires that the management of the store, consider different factors such as; discounts, sales, surcharges, rebates and loss of inventory.

Advantages

• The method retail it does not require a physical inventorybecause you only need a shop to record the retail prices of the items If, a chain of stores has several locations in different cities, carry out a physical inventory can become an expensive task and requires a lot of time, but through this method can be simplified.

• The method retail also allows the organization to create a report of the inventory value for the preparation of budgets or the preparation of consolidated
• Another advantage is that produce records of inventory control solids, since that links products-direct sales and provides a final count without a lot of work.

• It is directly from articles and not lots or groups of articlesfor this reason, when reconciles the amount of available units with the quantity purchased, you will know how many units sold.
• Provides the details about the items not accounted for in the records of sales, theft, and the lack of products they are easier to detect through the Method.

From the economic point of view of its application, the method retail it is simple and cost-effective.

Disadvantages

• The method retail inventory is only accurate if all the prices in general are the same and all price changes occur at the same . In most cases, this is not realistic in the retail sector due to the many variations that exist in the price of the goods.
• The depreciation, the sales, the product damage, and theft can affect the price of the inventory. For this reason, any calculation made using the method should serve only as an estimate.
• Base the value of the inventory method retail it is more an assumption educated than a science.
• It is not possible to fully account for the available items in the inventorysuch as; discounts are not registered, returns, goods in transit and goods without

Conclusion

As we have already been able to see the method retail has advantages and disadvantages therefore it is necessary that from your company to perform an assessment to determine if the system of inventory can be beneficial for the store, and thus guarantee the supply of products to the customers.

It is always important to be at the forefront of technological innovation since every day the industry retail sees this as a chance to refine their processes and improve efficiencies, as is the case the package of solutions developed in Latin america by Intelligenxia.