inventory management

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inventory management

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inventory management

  1. 1. Nishant singh (128938)
  2. 2.  Process of flow of units Controlling the transfer of units
  3. 3. Raw material Work in process Finished goods Basic input converted into finished product Semi manufactured product Complementary product
  4. 4.  Three general motives for holding inventories Transaction motive •Maintain inventories to facilitate production Precautionary motive •Holding of inventories Speculative motive •Increase or reduce inventory
  5. 5. Maintain a large size of inventory of raw material Maintain a minimum investment in inventories. Ensure continous supply of raw material
  6. 6.  To manage inventories efficiency,owner should be sought to the following two questions. How much should be ordered When should it to be ordered Relates to EOQ Relates to uncertainity
  7. 7. Major inventory management problem : how much inventory should be added when inventory is replenished. These problems are called Order quality problem
  8. 8. Determining an optimum inventory level involves two types of costs: • Include cost of raw materials like : • transporting • Inspecting • receiving Ordering cost • Include cost of maintaing level of inventory like : insurance • taxes • storage cost Carrying cost
  9. 9. (annual requirement x per order cost) order size Total carrying cost= average inventory x per unit carrying cost Total cost= total carrying cost + total order costs
  10. 10. ABC control Just In Time control  Maintain several types of inventories delivery of material is  Not possible to keep uniform control synchronised  Classify inventories according to lot eliminate carrying of large  Classify as GROUP A,GROUP B, GROUP C inventories

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