Management Control of Merchandise Inventory: A Tool for Cost Optimization and Financial Performance

Abstract

Efficient inventory management represents a critical component of financial performance in commercial enterprises. This article investigates inventory management control as a strategic instrument for cost optimization, focusing on the theoretical framework of storage costs, procurement costs, holding costs, stockout costs, and overstocking costs — and the two main budgeting approaches: fixed-quantity and fixed-period replenishment. Through a qualitative analysis of specialized literature and the application of a numerical case study based on a consumption forecast, the research demonstrates how structured budgeting of inventory replenishment prevents stockouts, minimizes immobilized capital, and improves cash flow predictability. The results show that fixed-quantity replenishment offers greater precision in avoiding stockouts for high-consumption periods, while fixed-period replenishment ensures regularity but requires variable order quantities. The paper concludes that integrating inventory budgeting within the management accounting framework of Moldovan enterprises is essential for sustainable financial performance. CZU: 005.932:657.371(478); JEL: M41, M21, D24, L25