1. Presented By
Md. Shamsuzzaman
B.Sc. (WUB), M.Sc. (BUTEX)
Lecturer,
Department of Textile Engineering
World University of Bangladesh
Contact: +880 1814 868653
Email: shamsuzzaman@textiles.wub.edu.bd
6/22/2020Slide Prepared by- Md. Shamsuzzaman
Presentation
on
Inventory Management
Course Name: Management and Maintenance of Textile Machinery
Course Code: TE 901
2. 1. Definition of maintenance
2. Maintenance activities
3. Aims of maintenance
4. Importance of maintenance
5. Effects of maintenance
6. Plant failure analysis
7. Types of maintenance
8. Steps of maintenance
9. Records for the effective maintenance controlling
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Inventory
Inventory is the term for
the goods available for sale
and raw materials used to
produce goods available
for sale.
Inventory control
Keeping control of your
stock so that you’re able to
hold the least amount of
inventory in your
warehouses makes for
easier organization, lower
holding costs, better cash
flow, and more space within
your warehouses.
Management
Management is a process of
planning, decision making,
organizing, leading, motivation
and controlling the human
resources, financial, physical, and
information resources of an
organization to reach its goals
efficiently and effectively.
Inventory Management
Inventory management refers to
the process of ordering, storing,
and using a company's inventory.
These include the management
of raw materials, components,
and finished products, as well as
warehousing and processing
such items.
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Barcode scanner integration
Reorder reports and adjustments
Product details, histories, and locations
Comprehensive inventory lists and counts
Variants, bundles and kitting
Syncing stock on hand with sales orders and
purchase orders
Inventory control includes
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Objectives of inventory control
To reduce investment in inventories and made effective use of capital investments
To supply drugs in time
Efforts are made to procure goods at minimum price without bargaining the quality
To avoid stock out and shortages
Wastages are avoided
Inventory management is essential to maintain a large size inventory for efficient
and smooth production and also for sales operation
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Ensures an adequate supply of materials
Minimizes inventory costs
Facilitates purchasing economies
Eliminates duplication in ordering
Better utilization of available stocks
Provides a check against the loss of materials
Facilitates cost accounting activities
Enables management in cost comparison
Locates & disposes inactive & obsolete store items
Consistent & reliable basis for financial statements
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Benefits of Inventory Management
i. Save Money
ii. Satisfy Customers
iii. Keep Your Warehouse Organized
iv. Save Time
v. Improve Cash Flow
vi. Maintain Optimal Inventory Levels
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Effective inventory management techniques
1. ABC ANALYSIS (Always Better Control)
2. VED ANALYSIS (Vital, Essential,
Desirable)
3. EOQ (Economic Order Quantity)
4. Lead Time
5. Buffer stock
6. Perpetual inventory control system
7. SDE classification
8. HML Classification
9. FSN Classification
10. SOS classification
11. XYZ Classification
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Type-1: ABC ANALYSIS
ABC ANALYSIS
In this technique the materials are divided into 3 groups. A,B,C according to
the cost of the materials and money value
A items - A few costly items come under this category these items require
proper storage and handling, overstock is avoided
B items - These are neither costly nor cheap
C items - Cheaper in cost
It is also known as Selective Inventory
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Type-2: VED ANALYSIS (Vital, Essential, Desirable)
VITAL – Such category as vital whose
absence (no stock) cannot be tolerated
even for an single day.
ESSENTIAL – Those without which an
industry can function but may affect the
quality of service/product to some extent
but not to a very serious extent
DESIRABLE – Those whose absence will
not affect the functioning of the industry or
department or product case.
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Type-3: EOQ (Economic Order Quantity)
It is the most effective technique for
determination of the quantity
It is defined as the quantity of
materials to be ordered at one time
which minimizes the lost
The basic objective of EOQ is to
have an ideal order quantity for any
item and to economize on the cost
of the purchase
The widely used formula is
EOQ =√{2A×O/C}
Where
A=Annual or periodic requirement
O=Ordering cost
C=Carrying cost
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Type-4: Lead Time
It is the time taken between the placing of order and receipt of drug
to the department. The longer the lead time the larger is the safety
stock, resulting in excess of investment in inventories.
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Type-5: Buffer stock
A buffer stock is a system or
scheme which buys and stores
stocks at times of good harvests to
prevent prices falling below a
target range (or price level), and
releases stocks during bad
harvests to prevent prices rising
above a target range (or price
level).
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Type-6: SDE classification (Scarce, Difficult and Easy)
S – scarce, refers to generally imported items that require longer lead times and
often are in short supply.
D – difficult, refers to items that are often available domestically but are difficult
items to procure.
E – easy, refers to items which are freely available, that are often procured
quickly and locally, relatively hassle-free
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Type-7: HML Classification
H-M-L analysis is similar to ABC
analysis except the difference that
instead of “Annual Inventory
Turnover”, cost per unit criterion is
used.
H-High Price Items
M-Medium Price Items
L-Low Price Items
Objectives of HML analysis
Determine the frequency of stock
verification
To keep control over the consumption
at the department level
To evolve buying policy, to control
purchase
To delegate the authority to different
buyer
Determine the frequency of stock
verification
To keep control over the consumption
at the department level
To evolve buying policy, to control
purchase
To delegate the authority to different
buyer
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Type-8: FSN (Fast moving, Slow moving and Non moving
The date of receipt or the last date of issue, whichever is
later, to determine the no. of months which have lapsed
from last transaction
FSN is helpful in identifying active items which need to be
reviewed regularly and surplus items and nonmoving items
are examined
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Type-9: SOS classification (Seasonal and Off Seasonal items)
It is merit to seller to buy seasonal items at lower price and keep inventory and sell
them at high price during Off seasons
Decisions are taken based on the fluctuations and availability
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Type-10: XYZ Classification
X – Very little variation: X items are
characterized by steady turnover over time.
Future demand can be reliably forecast
Y – Some variation, occurs due
to seasonality, product
lifecycles, competitor action or
economic factors and It's more
difficult to forecast demand
accurately
Z – The most variation: Demand for Z items
can fluctuate strongly or occur sporadically
and making reliable demand forecasting
impossible
