Inventory is one of the largest investments made by most businesses, yet it is often overlooked. In fact, inventory can often mean the difference between success and failure. Between the lack of experience and the access to appropriate technology, small businesses have not had the tools to make smart inventory management decisions.

That is where ePhiphony Incorporated's patent pending solution, Phitch OC 9.0, comes in to guide small businesses to optimize their inventory at peak financial performance. Phitch is the only small business technology solution to optimize inventory at maximum economic profit. Economic profit consists of four primary components: net income, taxes, capital, and cost of capital. Economic profit is capable of weighing each business entity type by weighing their net income. In the case of inventory decisions, this means weighing the ordering costs and storage costs.

The ordering cost (in $) is the fixed portion of the cost for placing and setting up a single order, and is therefore independent of order quantity. It includes those costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, and following a purchase order. These can vary several dollars to place, to several thousand to transport a container, to tens of thousands for a change-over and clean-up in the food processing or pharmaceutical industries. With the advent of electronic order management, this cost been reduced dramatically and has exposed a particular weakness of the traditional approaches that still use EOQ model.

• Best in class electronic order = $1
• Typical electronic order = $10
• Paper based order = $100
• Manufacturing order = $1000
• Food processing order = $10000

Storage cost of inventory represents the costs of storing one dollar of inventory for one year and is frequently expressed as a percentage of the material cost per year. Storage cost is based on factors such as obsolescence, shrinkage, and insurance. Unlike holding cost, storage costs does not include the cost of capital. A typical value is 0.125 for a warehouse using a sit down fork lift while a warehouse using deep reach forklifts can reduce the value to 0.085. Factors such as special stoarge conditions such as temperature and humidity can play an important factor for food, pharmaceuticals, etc....

The point to stress is that order costs and storage costs vary and consequently not all inventory is the same. QuickBooks currently has no capability to weigh costs to determine inventory levels. Phitch OC 9.0 is the only tool on the market to weigh costs to determine the optimum level of inventory.

Phitch OC 9.0 automatically factors in the impact of order costs on inventory. To observe how order costs impact inventory, we can use Phitch's useful simulation tool to compare an order cost of a typical food processor ($10000) to a typical manufacturer ($1000). The end result is that Phitch adjusts the order quantity from 4144 units to 1307 units. In this case, Phitch recommends no safety stock. The impact to the business is $2666. This is for one item in a small business. Imagine how this can impact your business as whole.

Phitch OC 9.0 automatically factors in the impact of order costs on inventory. To observe how order costs impact inventory, we can use Phitch's useful simulation tool to compare an order cost of a typical paper order ($100) to a typical an electronic ($1). The end result is that Phitch adjusts the order quantity from 457 units to 76 units. Phitch also recommends a safety stock of 79 unit versus 22 units. The impact to the business is $228.9. This for one item in a small sample business. Imagine how this can impact your business as whole.

Phitch OC 9.0 automatically factors in the impact of storage costs on inventory. To observe how storage costs impact inventory, we can use Phitch's useful simulation tool to compare an order cost of a typical warehouse using a sitdown fork lift a deep reach fork lift. The end result is that Phitch adjusts the order quantity from 433 units to 474 units. Phitch also recommends a safety stock of 24 unit versus 20 units. The impact to the business is $37.92 This is for one item in a small business. Imagine how this can impact your business as whole.