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Inventory means…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.

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Why inventory is important in an organizationWhy inventory is important in an organization

Provide and maintain good customer service Enables smooth flow of goods through the

production process Provide protection against the uncertainty of

demand and supply Ensure a reasonable utilization of equipment

and labour. With purchase in bulk discount can be availabe.

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Definition of inventory Definition of inventory control control

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.

Inventory control is the part of a production program which specify the material requirement and schedule the order of work to be done

Inventory control means keeping a Inventory control means keeping a track of inventory , so that items are track of inventory , so that items are available when they are needed. It available when they are needed. It can be achieved through:----------can be achieved through:----------

Purchasing items at economic price at a proper time and in sufficient quantity.

Provision of suitable and secured location with sufficient space.

Inventory identification system.

Up to data and accurate record keeping by a responsible staff.

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Major activities of inventory Major activities of inventory controlcontrolPlanning 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.

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Objectives of inventory Objectives of inventory control control Protection against fluctuations in

demand;Better use of men, machines and

material;Protection against fluctuations in

output;For production economies;Control of stock volume;Control of stock distribution;

Factor affecting inventory control Factor affecting inventory control policypolicy

a) Characteristics of manufacturing system

b) Amount of protection against shortage

c) Organizational factors

d) Other factors(inflation , strike, Wars)

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Method of inventory Method of inventory controlcontrolEconomic order quantity(

Economic lot size)

Re-Order level

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ABC AnalysisABC Analysis

It is efficient control of stores requires greater in case of costlier items

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Continued….Continued….Item Item Quality Quality Quantity orderQuantity order Checking Checking

AA CostlierCostlier LessLess Regular system to see Regular system to see that there is no that there is no overstocking as well as overstocking as well as that there is no danger of that there is no danger of production being production being interrupted for unwanted interrupted for unwanted material. material.

BB Less costlier Less costlier Order may be on Order may be on review basis. review basis.

Position being viewed in Position being viewed in each montheach month

CC Economical Economical Larger Larger Order in large quantity Order in large quantity so that cost can be so that cost can be avoidedavoided

Limitation of inventory Limitation of inventory controlcontrolEfficient inventory control method can

reduce but cannot eliminate business risk.

The objective of better sales through improve service to customer ; reduction in inventories to reduce size of investment and reducing cost of production by smother production operation are conflicting each other

The control of inventories is complex because of many function it perform .

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