Unit 10 Discussion
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MM225 Business Math
Unit 10 Discussion
Post 1 – My Inventory Method
October 26, 2023
I have a lot of hobbies such as making jewelry, and professional interests such as being able to advocate
legally for those in need of affordable housing. But since my adult kids were little, I always wanted to
open a Lego building Play N Learn store that was open to all ages. From my oldest (36) to my youngest
(8), and grandkids in between (ages 14 – 1), Legos have always been a part of the dynamic in our home.
And truthfully, I have enjoyed building and helping build with Legos since I got my first set on my 4
th
birthday (according to my mother) and have built and encouraged imagination with all my kids. Legos
have a hold on several family members as well, my older cousin has built one of the Lego elaborate sets
every Christmas since middle school. Last year he built the Death Star, the year before that he built the
Taj Ma Hal. He has done so many things that he has converted his garage into a “Lego Room” because his
kids can’t compete with his collection.
Think of Build a Bear, the Build n Learn Play Area and Store is very similar only with Legos, with the
addition of parents being able to bring in all those lose Legos they are tired of picking up or vacuuming
up that no one plays with anymore for a reasonable trade in value. These loose Legos will supply our
Build Your Own area, so building can take place even without a reservation. We would have Build
Stations, Birthday Builds, Saturday Creative Workshops with new Lego Releases, and even Team Building
Workshops. Legos have incredible benefits and help all ages tap into, build on to, and develop social
skills, creativity, hand-eye coordination, confidence, problem solving, perseverance, fine motor skills, and
increases the ability to concentrate. In a professional sense Legos encourage teamwork, employee
engagement, remind one of their capabilities, risk taking, and communication skills. The actual benefits
are endless, and as a parent I can attest to the benefits to a child with communication disorder and social
anxiety. I have a love for both Playdough and Legos for the help they have provided with my son’s
disabilities. However, if I were to choose one to share with the world, it would be Legos. I would rather
step on a Lego than clean up sticky Playdough after a small child’s birthday party (insert sarcastic laugh
here). I won’t go into more detail, because otherwise this would be too long, but this is a very real
dream, that as the years go by my family now shares with me. And again, speaking as a parent, when
birthday parties are planned for kids here in Portland, Oregon, our safe and clean options seem to be
dwindling more and more each year.
For this type of business, I would choose to use the Retail Inventory Method. The reason for my choice is
connected to the Legos themselves. If you know Legos at all, it’s all about estimation. Personally, I
estimate how many I will vacuum up in a week, or how many I will step on each day. Estimation of
products for sale, products used for private builds, build your own (the loose one’s parents turn in), etc.
is a more accurate way, as well as a time saver, in regulating both the inventory, inventory to be
purchased, build your own bins, and upcoming build parties. Retail inventory method is a time saver, that
bares repeating, is based on estimation making numbers never 100% accurate. However, it will ensure
that there is enough product on hand so there is never a missed opportunity to let the imagination build
something new and amazing.
Advantages
Disadvantages
Establishes the retail price of inventory
Only an estimation of inventory
Provides real time inventory valuation
Additional record keeping
Known for simplicity
Unreliable for many organizations to fully account
for inventory changes such as unrecorded
markdowns, returns, merchandise waiting for
approval, merchandise in transit, unsold
merchandise, depreciation, product damage, and
theft.
Provides detailed inventory control records
The higher the volume the harder it is to estimate
Reduces wasteful & unnecessary spending, saving
time and money
Assumes the historical basis for the markup
percentage continues to the current price
Permits the calculation of net income without the
physical count – Estimation
Manual labor increases labor and process costs
Ensures products are always plentiful, buffering
against unexpected demand surges, and planning
for seasonal demand, reducing unsellable
product in addition to increasing accuracy in
ordering, status, and tracking
Helps improve understanding of customers and
their buying patterns
Increased product organization
Improved customer retention and engagement
For multiple locations, inventory can be from a
centralized location
Referenced
Bragg, S. (2023). Retail inventory method definition. Accounting Tools. Retrieved from
https://www.accountingtools.com/articles/retail-inventory-method
Bass, B. (2017). What Are the Advantages & Disadvantages of Using the Retail Inventory
Method? Chron Small Business. Retrieved from
https://smallbusiness.chron.com/advantages-disadvantages-using-retail-inventory-
method-23136.html
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