Inventory Control Final Ppt

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Inventory Control Final Ppt

  1. 1. 10/29/09 XIDAS, INVENTORY CONTROL Topic
  2. 2. <ul><li>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. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  3. 3. <ul><li>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. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  4. 4. 10/29/09 XIDAS, INVENTORY CONTROL Type of Inventory Reason for holding the Inventory (1 ) Raw materials To reap the price advantage available on seasonal raw materials. (2) Work in progress To balance the production flow. (3) Ready made components When the components are bought rather than made. (4) Scraps They are disposal of in bulk. (5) Finished Goods Lying in stock rooms and waiting dispatches
  5. 5. <ul><li>Protection against fluctuations in demand; </li></ul><ul><li>Better use of men, machines and material; </li></ul><ul><li>Protection against fluctuations in output; </li></ul><ul><li>Control of stock volume; </li></ul><ul><li>Control of stock distribution. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  6. 6. <ul><li>Planning the inventories; </li></ul><ul><li>Procurement of inventories; </li></ul><ul><li>Receiving and inspection of inventories; </li></ul><ul><li>Storing and issuing the inventories; </li></ul><ul><li>Recording the receipt and issues of inventories. </li></ul><ul><li>Physical verification of inventories; </li></ul><ul><li>Follow-up function ; </li></ul><ul><li>Material standardization and substitution. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  7. 7. 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. 10/29/09 XIDAS, INVENTORY CONTROL Production Work-in-progress
  8. 8. 10/29/09 XIDAS, INVENTORY CONTROL Inventory level Supply rate Demand rate
  9. 9. <ul><li>Deciding the maximum- minimum limits of inventory; </li></ul><ul><li>Determination of Reorder point; </li></ul><ul><li>Determination of reorder quantity; </li></ul><ul><li>Perpetual inventory control; </li></ul><ul><li>ABC analysis; </li></ul><ul><li>Method of control through turn over. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  10. 10. <ul><li>Quantity of inventory above which should not be allowed to be kept. This quantity is fixed keeping in view the disadvantages of overstocking; </li></ul><ul><li>Factors to be considered: </li></ul><ul><li>Amount of capital available. </li></ul><ul><li>Godown space available. </li></ul><ul><li>Possibility of loss. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  11. 11. <ul><li>Cost of maintaining stores; </li></ul><ul><li>Likely fluctuation in prices; </li></ul><ul><li>Seasonal nature of supply of material; </li></ul><ul><li>Restriction imposed by Govt.; </li></ul><ul><li>Possibility of change in fashion and habit. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  12. 12. <ul><li>This represents the quantity below which stocks should not be allowed to fall . </li></ul><ul><li>The level is fixed for all items of stores and the following factors are taken into account: </li></ul><ul><li>1.Lead time- </li></ul><ul><li>2. Rate of consumption of the material during the lead time. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  13. 13. <ul><li>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. </li></ul><ul><li>This level is fixed some where between maximum and minimum level. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  14. 14. <ul><li>It is also known as standard order quantity , optimum quantity or economic lot size. </li></ul><ul><li>By definition economic order quantity that size of order for which the total cost is minimum. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  15. 15. <ul><li>The widely used formula is </li></ul><ul><li>EOQ =√{2RCp/Ch} </li></ul><ul><li>Where , </li></ul><ul><li>R= Annual quantity to be used in units. </li></ul><ul><li>Cp=Cost of placing an Order. </li></ul><ul><li>Ch= cost of holding one unit for one year. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  16. 16. <ul><li>It is efficient control of stores requires greater in case of costlier items. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  17. 17. 10/29/09 XIDAS, INVENTORY CONTROL Item Quality Quantity order Checking A Costlier Less Regular system to see that there is no overstocking as well as that there is no danger of production being interrupted for unwanted material. B Less costlier Order may be on review basis. Position being viewed in each month C Economical Larger Order in large quantity so that cost can be avoided
  18. 18. 10/29/09 XIDAS, INVENTORY CONTROL
  19. 19. <ul><li>Stores ledger, stores control, cards or bin cards are properly maintained ; </li></ul><ul><li>Quantity balance store shown in the store ledger; stock control and bin cards are reconciled; </li></ul><ul><li>Exploring the cause of discrepancies if any physical balances and book balances. </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  20. 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. 21. This is were information collected from meter totals and tank dips are added and recorded.
  22. 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. 23. <ul><li>It means how many times a company’s inventory is sold and replaced (finished product) </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  24. 24. <ul><li>Inventory ratio (Raw material)- </li></ul><ul><li>The value of material consumed during a period </li></ul>10/29/09 XIDAS, INVENTORY CONTROL Average value of inventory during that period High ratio = fast moving stock
  25. 25. <ul><li>YOUR CRITICAL ANALYSIS </li></ul>10/29/09 XIDAS, INVENTORY CONTROL
  26. 26. <ul><li>Thank you </li></ul>10/29/09 XIDAS, INVENTORY CONTROL

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