control procedures which insure that stocks are "turned" prior to the development of obsolescence.
4. Inventories are subject to physical deterioration. Depending upon the characteristics of the goods, physical decay or deterioration may occur, while goods are being held in inventory. Thus, to avoid losses through physical deterioration, it is desirable to have materials management and control procedures which insure that stocks are "turned" prior to the occurrence of physical deterioration.
5. Inventories are subject to theft. The extent to which theft occurs of goods held in inventory depends, to a great extent, on the characteristics of the goods. Most goods, however, are, to some extent, subject to theft. Effective materials management and control procedures will reduce inventory losses due to theft.
6. Inventories are subject price deterioration. Goods held in inventory may either gain or lose financial value, as a result of price level changes. In a price level environment characterized by steady inflation, the effects
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