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Inventory Control Dr. J. Domenech

Topic. Inventory Control Dr. J. Domenech. Inventory means…. All the materials , parts, suppliers, expenses and in process or finished products recorded on the books by an organization and kept in its stocks, warehouses or plant for some period of time. Definition of inventory control.

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Inventory Control Dr. J. Domenech

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  1. Topic Inventory Control Dr. J. Domenech

  2. Inventory means… DRD All the materials , parts, suppliers, expenses and in process or finished products recorded on the books by an organization and kept in its stocks, warehouses or plant for some period of time.

  3. Definition of inventory control DRD Inventory control is the technique of maintaining the size of the inventory at some desired level keeping in view the best economic interest of an organization.

  4. DRD

  5. Objectives of inventory control DRD Protection against fluctuations in demand; Better use of men, machines and material; Protection against fluctuations in output; Control of stock volume; Control of stock distribution.

  6. Major activities of inventory control DRD Planning the inventories; Procurement of inventories; Receiving and inspection of inventories; Storing and issuing the inventories; Recording the receipt and issues of inventories. Physical verification of inventories; Follow-up function ; Material standardization and substitution.

  7. Inventory Decisions Executive decide two basic issues while dealing with inventories; (a) How much of an item to order when the inventory of that item is to be replenished. (b) When to replenish the inventory of that item. By definition, inventory facilitate production or satisfy customer demands. Inventory system is a set of policies and controls which monitors and determines the levels of inventory. Inventory conventionally include raw materials, work-in-progress, components parts, supplies and finished goods. Operations is a transformation process in which the inputs are raw materials and output is the finished goods. Suppliers Raw materials Finished good customers. Production Work-in-progress DRD

  8. Inventory level Supply rate Demand rate DRD

  9. Steps in Inventory control DRD Deciding the maximum- minimum limits of inventory; Determination of Reorder point; Determination of reorder quantity; Perpetual inventory control; ABC analysis; Method of control through turn over.

  10. Maximum stock level DRD Quantity of inventory above which should not be allowed to be kept. This quantity is fixed keeping in view the disadvantages of overstocking; Factors to be considered: Amount of capital available. Godown space available. Possibility of loss.

  11. Continue…. DRD Cost of maintaining stores; Likely fluctuation in prices; Seasonal nature of supply of material; Restriction imposed by Govt.; Possibility of change in fashion and habit.

  12. Minimum stock level DRD This represents the quantity below which stocks should not be allowed to fall . The level is fixed for all items of stores and the following factors are taken into account: 1.Lead time- 2. Rate of consumption of the material during the lead time.

  13. Re-ordering level DRD It is the point at which if stock of the material in store approaches, the store keeper should initiate the purchase requisition for fresh supply of material. This level is fixed some where between maximum and minimum level.

  14. Economic Order Quantity DRD It is also known as standard order quantity , optimum quantity or economic lot size. By definition economic order quantity that size of order for which the total cost is minimum.

  15. Computation of EOQ DRD The widely used formula is EOQ =√{2RCp/Ch} Where , R= Annual quantity to be used in units. Cp=Cost of placing an Order. Ch= cost of holding one unit for one year.

  16. ABC Analysis DRD It is efficient control of stores requires greater in case of costlier items.

  17. Continued…. DRD

  18. Perpetual Inventory System DRD It is a method of recording stores balances after every receipt and issue, to facilitate regular checking and obviate closing down for stock taking. -Wheldon

  19. Factors which help helpful to make system successful DRD Stores ledger, stores control, cards or bin cards are properly maintained ; Quantity balance store shown in the store ledger; stock control and bin cards are reconciled; Exploring the cause of discrepancies if any physical balances and book balances.

  20. Balance sheet is were information is calculated to determine losses and gains from daily sales. This is a very important part of fuel management it will give you important records of sales (this is inventory control).

  21. This is were information collected from meter totals and tank dips are added and recorded.

  22. This is were we record our calculated losses and gains for every individual month. This sheet is used for the years sales report. Will give you sales of individual months. Record keeping is a important method of tracking your inventory.

  23. Inventory Turnover method It means how many times a company’s inventory is sold and replaced (finished product) DRD

  24. Continued ….. Inventory ratio (Raw material)- The value of material consumed during a period Average value of inventory during that period High ratio = fast moving stock DRD

  25. YOUR CRITICAL ANALYSIS DRD

  26. DRD Thank you

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