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Introduction The aim of every business activity is to increase the value of the original resources which are risked by the owners in the venture. Receiving and storing are the key considerations in the material management because(I) The quality of the end product largely depends on the quality of material received(II) It is responsible for smooth flow of material(III) Stores organisation acts as custodian of stock items(IV) Affects the production cost
Stores function:(I) Receipt(II) Storage(III) Retrieval(IV) Issue(V) Records(VI) House keeping(VII)Surplus stock(VIII)Verification(IX) Co-ordination and co-operation
Types of inventory Reasons for holding1. Raw material Hand to mouth buying is not feasible Pre operation seasoning To reap the price advantage To safeguard against the stock outs2. Work in progress To balance the production flow To eliminate the ideal capacity of machines To even out the imbalance3. Consumable stores Daily consumption is very low4. Spares The rate of consumption is very low5. Read made components Requirement of production6. Scraps They are disposed in bulk
Comparison of high and low levelof inventoriesHigh level Low levelLocking up of working capital Production stoppagesHigh insurance charges Idle production capacityMore storage space Idle labor timeDeterioration in the quality of material Liability of fixed overheadChances of theft and pilferage Failure to meet delivery orderEvaporation of alcoholic material No bulk discount
Approaches to stores location(I) Fixed location(II) Random location(III) Zoned location
Recording of material Bin card The stores ledger
Issue of material(I) FIFO(II) LIFO(III) HIFO(IV) Average cost method(V) Replacement price method(VI) Standard price method(VII)Actual price method(VIII)Inflated price method
Centralised and decentralisedstoring Advantages Disadvantages