What are the two methods for tracking real-time inventory changes?

The method of tracking real-time inventory changes using dollar amounts and units is effective because it provides a comprehensive view of the inventory status. Tracking by dollar amounts gives insight into the overall value of the inventory, which is essential for financial planning and decision-making. Meanwhile, monitoring units allows for a clear understanding of how many items are on hand, which helps in assessing stock levels and determining when to reorder products.

This dual approach is critical in inventory management because it allows operations to evaluate both the volume of inventory and its monetary worth, enabling more informed choices regarding pricing, purchasing, and stock management overall. For example, if a business notices a decrease in the number of units but maintains a steady dollar value, it may indicate rising prices rather than increased sales, prompting action to investigate further.

In contrast, other methods like physical inventory and digital records prioritize the format of maintaining inventory but do not inherently provide real-time tracking. Supplier lists and sales reports focus more on procurement and sales dynamics rather than direct inventory status, while employee counts and restocking dates relate to staffing and operational logistics, which do not directly reflect the actual inventory levels. Thus, using dollar amounts and units provides a precise and actionable insight into inventory changes in real time.