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Invetory management


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Published in: Business, Economy & Finance

Invetory management

  2. 2. INTRODUCTION<br />Inventory<br /><ul><li>Raw material
  3. 3. Work in process
  4. 4. Finished goods
  5. 5. Inventory management</li></li></ul><li>NATURE OF INVENTORY<br />Quality<br />Speed<br />Flexibility<br />Cost<br />
  6. 6. PURPOSE / MOTIVE OF HOLDING INVENTORY<br />The Transaction motive<br />The Precaution motive<br />The Speculative motive<br />
  7. 7. BENEFITS OF HOLDING INVENTROY<br />Avoiding Lost Sales<br /><ul><li>Without the necessary goods in hand
  8. 8. Lose its business and market share</li></ul>Gaining Quantity Discounts<br /><ul><li>Bulk purchase on raw materials
  9. 9. Gain quantity discounts</li></li></ul><li>Reducing Order Cost<br /><ul><li>By making bulk orders
  10. 10. Number of orders will reduce
  11. 11. Lessen the cost involved.</li></ul>Achieve Efficient Production Runs<br /><ul><li> Holding an inventory make sure the production line will never ran out of raw materials</li></li></ul><li>Reducing risk of production shortages<br /><ul><li>If one single component ran out of stock
  12. 12. Entire production line could be halted</li></li></ul><li>Risks and costs of holding inventory <br />Capital Costs: <br /><ul><li>blocking of the firm’s financial resources
  13. 13. The funds may be arranged from own resources or from outsides. </li></ul>Storage and Handling costs<br /><ul><li> the rental of the godown
  14. 14. insurance charges, etc. </li></ul>. <br />
  15. 15. <ul><li>Risk of Price Decline
  16. 16. Risk of Obsolescence
  17. 17. Risk Deterioration in Quality</li></li></ul><li>Objectives Of Inventory Management<br /><ul><li>To keep inventory at sufficiently high level to perform production and sales activities smoothly.
  18. 18. To minimize investment in inventory at minimum level to maximize profitability both in adequate & excessive quantities of inventory are undesirable for business</li></li></ul><li>Availability of material <br />Minimize the wastage <br />Promotion of manufacturing efficiently <br />Better services to customers<br />Control production level<br />Optimum levels of inventories <br />
  19. 19. Tools and techniques of inventory management <br />A-B-C Analysis <br /><ul><li>The materials are divided into three categories viz, A, B and C</li></ul>Inventory Reports <br /><ul><li>Informed with the latest stock position of </li></ul> different items<br /><ul><li>Should contain all information necessary for managerial action</li></li></ul><li>