This document discusses inventory control and management. It defines inventory as physical resources held for sale or transformation, and inventory systems as policies that monitor levels and determine replenishment needs. Reasons for holding inventory include stabilizing production, taking advantage of discounts, and meeting demand during replenishment periods. The objectives of inventory control are to track inventory levels of the right quality and quantity. Costs associated with inventory include purchase, capital, ordering, carrying, and shortage costs. Decisions around inventory planning include determining order quantities and timing.

1. Inventory Control & Management

2. INTRODUCTION
 Inventory-A physical resource that a firm holds in stock
with the intent of selling it or transforming it into a more
valuable state.
 Inventory System- A set of policies and controls that
monitors levels of inventory and determines what levels
should be maintained, when stock should be replenished,
and how large orders should be placed.

3. Items carried in inventory can be
 Raw materials
 Purchased parts
 Components
 Subassemblies
 Work-in-process
 Finished goods

4. Reasons for keeping Inventories
 To stabilise production
 To take advantage of price discounts
 To meet the demand during the
replenishment period
 To prevent loss of orders(sales)
 To keep pace with changing market
conditions

5. Objectives and Benefits
Inventory control aims at keeping track of
inventories. In other words, inventories of
good quality and right quantities should be
made available to different departments as
and when they needed.

6. COSTS ASSOCIATED WITH INVENTORY
 Purchase (or Production) cost
 Capital cost
 Ordering cost
 Inventory carrying costs (holding
costs)
 Shortage cost

7. Inventory Planning and Control
For maintaining the right balance between high
and low inventory to minimize cost

8. Inventory Control Decisions
Decisions:
 How much to order?
 When to order?

9. ECONOMIC ORDER QUANTITY
Annual Cost ($)
Higher
Minimum
Total Annual
Stocking Costs
Total Annual
Stocking Costs
Annual
Carrying Costs
Lower
Annual
Ordering Costs
Order Quantity
Smaller EOQ Larger
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10. TYPES OF INVENTORY MODELS
 Simple EOQ model
 EOQ model with stock outs
allowed
 Inventory model under risk

11. Simple EOQ model

12. EOQ model with stock outs allowed

13. Inventory model under risk

14. SELECTIVE CONTROL OF INVENTORY
 Selective control refers to the variation in method of
control from item to item on some selective basis.
Many criteria used for this purpose are
 Based on the cost of product
 Lead time
 Usage rate
 Procurement difficulties, criticality, frequency of
usage

15. SELECTIVE CONTROL OF INVENTORY
 ABC analysis
 VED Analysis
 Material requirements planning (MRP)

16. CONCLUSIONS
 Careful classification of your inventory, and
continuing analysis of those classifications, can play
a vital role in maintaining cost at the efficient levels
you have established as your goals
 Inventory control is a constant requirement of doing
business successfully.

17. Thank you