Definition of inventory and inventory control, types of inventory, classification of inventories cost, ordering procedure.

1. INVENTORY CONTROL

2. INVENTORY MEANS…
 All the materials parts, suppliers, expenses and
in process or finished products recorded on the
books by an organization and kept in its stocks,
warehouses or plant for some period of time

3. DEFINITION OF INVENTORY AND
INVENTORYCONTROL
 INVENTORY : It is basically defined as the goods or
products available in a place known as stores for it’s
future use in a process.
 INVENTORY CONTROL : Inventory control is the
technique of maintaining the size of the inventory
at some desired level keeping in view the best
economic interest of an organization.

4. TYPES OF INVENTORIES
 RAW MATERIAL INVENTORIES
 WORK IN PROCESS INVENTORIES
 SPARE PART INVENTORIES
 FINISHED GOODS INVENTORIES
 TOOLS AND EQUIPMENTS

5. HOLDING STOCK
 A stock is the material that is kept in the
inventory, which will make the quantity
available at the time of crises
 Demand fluctuates due to factors like instability
in production, sudden change in demands,
defective raw material, etc.

6. PURPOSE OF HOLDING STOCK
1.Adequate supply to the customer
2.Time period of order placing
3.Deal with natural calamities
4.Sudden increase in demand
5.Alternative use for the damage material

7. INFLUENCE OF DEMAND ON
INVENTORY
 1CUSTOMER DEMAND: The customer sometimes
expect larger quantity of production, due to which
load on inventory may increase.
 2.PRODUCT DEMAND: Due to increase in product
demand the number of product to be produced
increases.

8. 3.INCREASE IN SALES: This may cause due to
product demand. Due to this the planning department
increases the production of products per shift.
4.MARKET RESEARCH: The above report is
sent to the process planning team that decides the
production to be increased, affecting inventory
requirements.

9. CLASSIFICATION OF INVENTORIES
COST
 1.PURCHASE COST : It is the actual purchase
cost of the product.
 2.ORDERING COST : Cost of replenishing
inventory.
 3.HOLDING COST : Cost of holding an item in
inventory.
 4.SHORTAGE COST : Temporary or permanent
loss of sales when demand cannot be met.

10. Chart Showing Ordering
Procedure
Receiving New Materials
Purchase Department
Purchase Requisition
Accounts
Department
Suppliers
Stores
Purchase
Department
Goods Receiving
Department (Stores)
Supplier
Purchase Order
Goods with Delivery Notes
Goods Received Notes