Inventory includes raw materials, work in process, and finished goods. It is managed to meet future demand and resale goals. There are different inventory control methods like ABC analysis that categorizes items by importance. The economic order quantity model determines the optimal amount to purchase to minimize ordering and holding costs. Last in first out and first in first out are methods for issuing inventory. Periodic and perpetual systems exist for inventory counting, and ABC analysis determines the frequency of counting for each category. Efficient inventory management involves proper planning of purchasing, handling, and storage of materials.

1. Joyal Sandeep

2. Meaning of Inventory
A stock of items held to meet
future demand
The goods and materials that
a business holds for the ultimate
goals to have a purpose of resale.

3. Types of Inventory
Work in
process
Work in
process
Work in
process
Finished
goods
Raw
Materials
Vendors Customer

4. Inventory Management
Inventory management supervises the
flow of goods from manufacturers
To warehouses and
from these facilities
To point of sale.

5. Process of purchasing RM
SO received MRP prepared
Purchase
requisition
PO creation
Goods
Received(GRN)
QI
Components
for assembly
Assembly to
Shop Floor
Dispatch to FG
Goods to
Consumer

6. Methods of inventory Control
 ABC:
 The inventory items that are the most important
for a specific industry or firm should be items that
account for the greatest value.
A:- Very Important
B:- Moderately Important
C:- Least Important

7. Category Annual Consumption
A 34.5 L & above
B 6.50 L to 34.50
C 1.00 L to 6.50
D 0.1 L to 1.00 L
E 0 to 0.1 L
F Nil consumption

8. EOQ
 The economic order quantity is the optimum
quantity of goods to be purchased at one time
in order to minimize the annual total costs of
ordering and carrying or holding items in
inventory.
 EOQ is also referred to as the optimum lot size.

9. LIFO and FIFO
 Last in Fast out
 First In First Out
Basically the store follows the method of FIFO
(First In First Out). This method is not applicable for
those goods which have self life expiry date (SLED).
EX:- Material procured in June which has SLED lesser
than the material procured in January.

10. Journal Entries to be passed at
various level
 Goods Purchased and payment made to vendors
a) Stock a/c …….Dr
To GR/IR a/c
( GRN Entry)
b) GR/IR a/c …….Dr
To Vendors a/c
c) Vendors a/c……Dr
To Bank a/c

11. JE to be passed while shifting FG to
the FG unit
 For Goods Taken to FG Unit
 MATERIAL CONSUMPTION A/C……..DR (P/L) 30
 FG STOCK A/C ………………………………..DR (B/S) 30+OH%
 TO RM STOCK IMPORT
(B/S) 10
 TO RM STOCK LOCAL
(B/S)20
 To FG STOCK A/C …………………………………..
(P/L) 30+OH %

12. Credit sales entry
 PARTY A/C …………………DR 165
 TO SALES A/C 165
 COST OF SALES A/C…………DR 150
 TO FINISHED GOODS A/C 150

13. BDN Sales
 It is also know as subcontracting.
 Basically materials sold to the vendors for the purpose
of assembling.
 Then assembled goods are again bought back and new
GRN is prepared. (101)
 Sub-contracting is mainly undertaken for the purpose
of avoiding wastages…

14. Way of issuing or picking the
materials
 To the Sub-contractors:-
 Basically the purchase department (sub- assembly buys and
Electrical automation) will post the PO in the system (material
required to prepare a particular meters and other products).
 In the PO the part numbers of each components will be
mentioned and accordingly materials are picked and the person
who prepares GRN will prepare the NBX (Non Billable X note)
and finally the goods are send along with NBX note to the
respective venders.
 This NBX will help the Venders to audit the goods received. The
NBX will help the vendors to check the goods received against
the PO sent to them. This how the good are issue or picked.
541&542 (101)

15. Inventory Checking
A category Twice in a year
B category Once in a year
C category Once in a Year

16. Inventory Counting Systems
 Periodic System
 Annually
 Quarterly
 Monthly
 Perpetual Inventory system
Continuous verification of inventory

17. Inventory management in nutshell
 IM is a proper planning of purchasing handling and
storing of materials.
 An efficient IM will determine a) what to purchase b)
how much to purchase c) where to purchase from d)
where to store and how to execute the materials.

18. THANK
YOU