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[Music] with this lecture we begin our coverage of inventory management chances are you have been exposed to this topic in Prior classes or on the job still I want to take the opportunity to briefly emphasize just how important inventories are from both a corporate and economic perspective inventories are all around us in warehouses in retail stores trucks and even in your own pantry without the flow and storage of inventory there would be no production or sales of goods in other words our economy would come to a standstill speaking of economy lets imagine that this bar represents the total economic activity in the u.s. measured in US dollars Im talking about a gross domestic product of over 18 trillion dollars here 8% of this amount is spent on transporting and storing inventories this is what we call logistics costs about one-fourth of that so two percent of the total economic output in the u.s. is consumed by inventory costs these numbers are even more impressive when we consider
