This document discusses inventory management. It defines inventory as items held to meet future demand, including raw materials, work in progress, finished goods, and supplies. Various inventory classification systems are described based on consumption, value, unit value, spare parts, availability, and source of supply. Different inventory costing methods are also outlined, including FIFO, LIFO, simple average, weighted average, and standard costing. An example is provided to calculate inventory value under LIFO, FIFO, and WAP methods.

1. BY
CYNDRELLA V S
PAVANATMA COLLEGE

2.  A stock of items held to meet future demand
 The assets that are:-
Held for sale in the ordinary course of
business; or
In the process of production for such a sale;
or
In the form of materials or supplies to be
consumed in the production process; or – In the
rendering of services.

4.  Raw Materials – Basic inputs that are
converted into finished product.
 Work-in-progress – Semi-manufactured
products need some more works before they
become finished goods for sale
 Finished Goods – Completely manufactured
products ready for sale
 Supplies – Office and plant cleaning materials
not directly enter production but are necessary
for production process.

5.  To Meet variations in customer demand:
Meet unexpected demand Smooth
seasonal or cyclical demand
 To solve Pricing related issues:
Temporary price discounts Hedge
against price increases.
 To ensure right quality of goods at right time
with right source at the right price

7.  ABC Classification(consumption)
(25/80+15/15+70/05)
 XYZ Classification(value stored) (Hi,Med,Low)
 HML Classification(unit-value stored) (Hi,Med,Low)
 VED Classification(spare parts mainly) (Vital,Ess,Des)
 FSN Classification(consumption) (Fast, Slow, Non)
 SOS Classification(agriculture) (Seasonal, Non)
 SDF Classification(availability) (Scarce, Difficult, Easy)
• GOLF Classification (source of supply) Govt, Ordinarily
available, Local and Foreign)

10. • First In First Out (FIFO) Method.
• Last In First Out (LIFO) Method.
 Simple Average Price Method
• Weighted Average Cost/price Method.
 Base Stock Price Method
 Standard Price Method
 Market Price Method

11.  ABC Ltd. Provides you with the following
information : - 1.1.20 11 Opening Stock 100
units @ Re 1. - 2.1.20 1 1 Purchased 400 units @
Rs 1.50. - 3.1.20 1 1 Issued 450 units. -4.1.20 11
Purchase 500 units @ Re 2.06. - 5.1.2011 issued
300 units.
Calculate Value of stock under LIFO, FIFO, WAP