What is Inventory Value?
Inventory Value
The value of goods in the warehouse converted into money.
What it means
Inventory value is the quantity in stock multiplied by the unit price. Items in storage do not return to money until they are used or sold, so they are referred to as “tied money.”
Having a lot of inventory gives you peace of mind, but it also ties up your money. We look at this value together when determining safety stock.
At the pen factory
The most money tied up on the 25th day was 300 pieces of black refill, worth 36,000 won. When I started making my own refill, it remained unused.
Why it matters
Just by looking at the quantity, you can see “where the money is locked up,” which was previously invisible.