This document discusses material management and inventory in manufacturing. It covers key aspects like the purpose of inventory, types of inventory, reasons for holding inventory, and functions of the stores department. The document compares high and low inventory levels and discusses approaches to stores location, recording material, issuing material, and centralized vs decentralized storing. The overall aim is to ensure smooth material flow and quality control to reduce costs and meet production needs.

2. 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

3. 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

4. Types of inventory Reasons for holding
1. Raw material Hand to mouth buying is not feasible
Pre operation seasoning
To reap the price advantage
To safeguard against the stock outs
2. Work in progress To balance the production flow
To eliminate the ideal capacity of
machines
To even out the imbalance
3. Consumable stores Daily consumption is very low
4. Spares The rate of consumption is very low
5. Read made components Requirement of production
6. Scraps They are disposed in bulk

5. Comparison of high and low level
of inventories
High level Low level
Locking up of working capital Production stoppages
High insurance charges Idle production capacity
More storage space Idle labor time
Deterioration in the quality of material Liability of fixed overhead
Chances of theft and pilferage Failure to meet delivery order
Evaporation of alcoholic material No bulk discount

6. Approaches to stores location
(I) Fixed location
(II) Random location
(III) Zoned location

7. Recording of material
 Bin card
 The stores ledger

8. 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

9. Centralised and decentralised
storing
 Advantages
 Disadvantages