Zero Inventory

Zero inventory is the technique which is used by businessman for reducing the cost of inventory and increasing the cash flow. In simple word, to keep zero stock for selling purpose will be called zero inventory. But this decision is taken carefully.

There are two risks which are associated with the zero inventory technique. 

1. Delay in Supply Risk 

For example, there is big distance between your supply line and actually delivery point, then, there is risk of delay in delivery. Due to this, you can lose your customer forever. So, this is risk of your loss of your overall return. If you do no use zero inventory, you can supply without delay.

2. Delay in Production Risk

If you are producing your own stock, production may be delayed due to uncontrolled factors. For example, there is shortage of laborers. So, some produced inventory is necessary everytime for supply to customers.

There are two benefits which are associated with the zero inventory technique. 

1. Zero Investment in Inventory

When we have decided not to keep any stock. Only supply or produce on the order, we can save our investment from inventory. For example, we have bought the stock of $ 10,00,000 but whole one year, we could not sell. So, it is the wastage of our big investment. Same investment, we can invest other sector and grow our business.

2. More Cash Inflow

With zero inventory in hand, we can get more cash inflow. Same cash inflow, we can use for paying other important expenses. We can use same cash inflow for buying good on cash for selling. With this, our goodwill will increase in the market. People can trust on us. With this, our overall worth will increase.


Whether we should use or not use zero inventory, we should take the help of accounting records and current situations. If supply line is so near, we need not buy and storage. We just get and deliver. For example, all big e-commerce websites are following zero inventory technique. They do not buy anything. They just have given the login id to sellers. Every seller maintain their stock in same website whether it is amazon or flipkart. They have made their business model  in such a way. When any seller see the bought item on same website. Seller supply. Seller also show out of stock inventory. With this, e-commerce website owner save their investment from inventory.

Remember : Instead of zero inventory technique, EOQ model is best.

Related :







access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Finance Journal Entries Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: Zero Inventory
Zero Inventory
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock