The document discusses inventory management. It describes the flow of inventory from raw materials to finished goods. There are three motives for holding inventory: transaction, precautionary, and speculative. Key aspects of managing inventory efficiently are determining how much to order and when to order. The major inventory management problem is determining the optimal order quantity. Determining the optimal inventory level involves balancing ordering costs and carrying costs. ABC control and Just In Time control are two approaches to inventory management.

1. Nishant singh
(128938)

2. 
Process of flow of
units
Controlling the
transfer of units

3. Raw
material
Work in
process
Finished
goods
Basic input
converted into
finished product
Semi
manufactured
product
Complementary
product

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. Maintain a large size of inventory of raw material
Maintain a minimum investment in inventories.
Ensure continous supply of raw material

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. Major inventory management problem :
how much inventory should be added when inventory is
replenished. These problems are called
Order quality problem

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. (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. 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