Inventory is generally considered to comprise in three main areas which are raw materials, work in progress and finished goods. Where these are held and in what quantities, and how they are managed will vary significantly from one organization to another. The activities of inventory management involves are identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status. In order to have clear inventory management, a company should not only focus on logistic management but also on sales and purchase management. Inventory management and control is not only the responsibility of the accounting department and the warehouse, but also the responsibility of the entire organization. Actually, there are many departments involved in the inventory management and control process, such as sales, purchasing, production, logistics and accounting. All these departments must work together in order to achieve effective inventory controls. Inventory includes raw material in progress, finished products, general Suppliers and equipment etc. inventory control may defined as systematic location, storage and Recording of goods in such a way that desired degree of service can be made to the operating shops at minimum ultimate cost. The need for inventory control is to maintain stock of goods and ensure Manufacturing according to the production schedule based on sale requirement and the lowest possible ultimate cost to the customer. Every enterprise needs inventory for smooth running of activities, it serves as link between production and distribution process and there is general time lag between the recognition of a need and its fulfillment. The greater time lag, the higher the requirement for inventory. The unforeseen fluctuation in demand and supply of goods also necessitate the need for inventory as it provides cushion for future price fluctuation. This paper includes the concept of inventory management, nature of inventory management, materials management techniques and inventory accounting
This document discusses effective inventory management practices and their impact on firm performance. It begins by defining key inventory management terms and outlining the importance of effective inventory practices. It then presents statements of the problem addressed, research questions, and study objectives and hypotheses.
The literature review discusses concepts of inventory management, the need for effective practices, and how inventory levels impact various costs and firm performance measures like return on capital employed and return on investment. The document aims to examine the relationship between inventory management practices and performance for selected consumable goods firms in Nigeria over 10 years.
The document discusses various aspects of production management including definitions, objectives, and key functions. Production management aims to produce quality products according to specifications, on schedule, and at minimum cost. It involves planning and regulating the transformation of raw materials into finished goods. Key aspects of production management include material management, cost control, and operational management. Material management involves inventory control and purchase functions. Cost control focuses on labor and material costs. Effective production management is essential for business success.
The document is a project report on inventory management at Coca-Cola Bottling Company in Ilorin, Nigeria. It analyzes the company's inventory procedures and policies. The key findings are:
1) Inventory management is important for optimizing resources and minimizing costs like storage, spoilage, and obsolescence.
2) Coca-Cola's inventory policy aims to maintain quality, increase market share and profits by ensuring adequate supplies for continuous production.
3) Analysis of the company's raw material usage found its ordering quantities did not match what the economic order quantity model predicted, indicating excess inventory investment at times.
Material management is the planning, organizing, and controlling of materials from initial purchase through destination to maintain an even production flow without excessive stock. The objectives are to obtain materials at the right quality, quantity, time, place and cost. Material management aims to gain purchasing economies, satisfy demand during replenishment, carry reserve stock to avoid outages, stabilize consumption fluctuations, and provide reasonable client services. The functional areas include purchasing, central supply services, stores, print shops, pharmacy, and dietary and linen services.
The document discusses inventory management. It defines inventory as goods held for production or sale. Maintaining optimal inventory levels is important for meeting production needs and customer demand while minimizing costs associated with excess inventory. Effective inventory management requires tracking inventory levels, maintaining accurate records, and controlling the supply/demand balance. The goals of inventory management are to have the right level of inventory at the lowest possible cost.
The document discusses inventory control systems and their importance for companies. It analyzes the inventory control system of Capital Land Assets Pvt Ltd. The objectives are to evaluate the effectiveness of their current inventory control system, analyze inventory control methods used, and identify problems in inventory management. The study examines inventory levels, purchase procedures, supplier selection, and identifies benefits of improving the inventory control system such as reduced costs and better resistance to price fluctuations.
Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
This document discusses effective inventory management practices and their impact on firm performance. It begins by defining key inventory management terms and outlining the importance of effective inventory practices. It then presents statements of the problem addressed, research questions, and study objectives and hypotheses.
The literature review discusses concepts of inventory management, the need for effective practices, and how inventory levels impact various costs and firm performance measures like return on capital employed and return on investment. The document aims to examine the relationship between inventory management practices and performance for selected consumable goods firms in Nigeria over 10 years.
The document discusses various aspects of production management including definitions, objectives, and key functions. Production management aims to produce quality products according to specifications, on schedule, and at minimum cost. It involves planning and regulating the transformation of raw materials into finished goods. Key aspects of production management include material management, cost control, and operational management. Material management involves inventory control and purchase functions. Cost control focuses on labor and material costs. Effective production management is essential for business success.
The document is a project report on inventory management at Coca-Cola Bottling Company in Ilorin, Nigeria. It analyzes the company's inventory procedures and policies. The key findings are:
1) Inventory management is important for optimizing resources and minimizing costs like storage, spoilage, and obsolescence.
2) Coca-Cola's inventory policy aims to maintain quality, increase market share and profits by ensuring adequate supplies for continuous production.
3) Analysis of the company's raw material usage found its ordering quantities did not match what the economic order quantity model predicted, indicating excess inventory investment at times.
Material management is the planning, organizing, and controlling of materials from initial purchase through destination to maintain an even production flow without excessive stock. The objectives are to obtain materials at the right quality, quantity, time, place and cost. Material management aims to gain purchasing economies, satisfy demand during replenishment, carry reserve stock to avoid outages, stabilize consumption fluctuations, and provide reasonable client services. The functional areas include purchasing, central supply services, stores, print shops, pharmacy, and dietary and linen services.
The document discusses inventory management. It defines inventory as goods held for production or sale. Maintaining optimal inventory levels is important for meeting production needs and customer demand while minimizing costs associated with excess inventory. Effective inventory management requires tracking inventory levels, maintaining accurate records, and controlling the supply/demand balance. The goals of inventory management are to have the right level of inventory at the lowest possible cost.
The document discusses inventory control systems and their importance for companies. It analyzes the inventory control system of Capital Land Assets Pvt Ltd. The objectives are to evaluate the effectiveness of their current inventory control system, analyze inventory control methods used, and identify problems in inventory management. The study examines inventory levels, purchase procedures, supplier selection, and identifies benefits of improving the inventory control system such as reduced costs and better resistance to price fluctuations.
Hi Friends
This is supa bouy
I am a mentor, Friend for all Management Aspirants, Any query related to anything in Management, Do write me @ supabuoy@gmail.com.
I will try to assist the best way I can.
Cheers to lyf…!!!
Supa Bouy
The document discusses inventory control techniques used by oil producing firms. It begins with a brief introduction on inventory management and control. It then discusses inventory control costs, levels, and techniques such as economic order quantity. The purpose is to appraise inventory control techniques in oil producing firms and examine their relationship to firm performance and profitability. It will use Nigerian Agip Oil Company as a case study.
This document provides an overview of materials management. It defines materials management as managing the flow of materials in an organization from suppliers to conversion into the finished product. The objectives are to ensure continuous operations and reduce costs. Materials management involves functions like purchasing, inventory control, and distribution. It aims to maximize production while minimizing costs. An integrated approach coordinates departments like purchasing, production, and distribution to optimize benefits.
Inventory Management-A tool for efficiency in Production Operations (Repaired)olusakin akindiPe
This document discusses inventory management in manufacturing small and medium enterprises (SMEs). It notes that inefficient inventory management is a serious problem for SMEs that leads to issues like low capacity utilization and loss of production time. The study aims to examine this problem and provide suggestions to improve inventory management practices. It hypothesizes that determining optimal stock levels, engaging skilled store personnel, and using automated stock control systems can help SMEs optimize resource use and improve overall efficiency. An effective inventory management system is important for SME performance and the broader economy.
This document discusses materials management and its key activities and functions. It defines materials management as the process of planning, organizing, and controlling the flow of materials through an organization. The main activities involved include materials requirements planning, purchasing, inventory control, expediting, transportation, and materials handling. Effective materials management can improve productivity, reduce costs, ensure quality, and smooth production schedules.
Materials management involves planning, organizing, and coordinating activities related to materials from procurement to disposal. It aims to procure the right quality and quantity of materials at the right time and price. The key functions of materials management include materials planning and programming, purchasing, stores, inventory control, transportation, and others. Effective materials management can reduce costs, improve quality, and ensure continuity of supply.
This document is a project report submitted by Sachin Bohra for a Bachelor of Commerce degree. It discusses inventory management practices at RPG Electrade Pvt. Ltd., a consumer electronics company based in Delhi, India. The report provides an overview of the electronics industry in India, describes techniques for inventory management used by RPG Electrade, and outlines the objectives and methodology of the study. Key findings include the need for RPG Electrade to follow Just-in-Time practices and maintain proper stores and spares to avoid shortages. Suggestions are made to calculate economic order quantities more frequently and improve communication across departments. The conclusion emphasizes the importance of accurate inventory management for reducing costs while meeting regulations and demands.
Study on inventory management conducted at reid&taylor(india)ltdProjects Kart
The document provides an introduction and overview of inventory management. It discusses key topics such as:
1) The objectives of inventory management are to specify optimal stock levels to balance product availability with minimizing costs. This involves determining replenishment times and carrying costs.
2) Inventories are typically divided into raw materials, work in process, and finished goods. Effective management of all three is important for production and sales operations.
3) Maintaining inventories involves costs, but they are necessary to facilitate smooth production and meet customer demand given uncertainties in supply and demand. The goal is to determine optimal inventory levels to avoid excess or shortage.
Material management plays an important role in logistics and supply chain management. It includes functions like purchasing, storage, distribution, and inventory control. These functions help ensure efficient material flow and minimize costs. As business concepts have evolved from distribution to integrated logistics to supply chain management, the focus is now on coordination across organizations to create customer value. Outsourcing, mergers and acquisitions are also important new trends that impact modern business operations and the role of material management.
This document discusses material management and inventory control. It defines material management as planning, procuring, storing, and providing materials to support production activities. Key functions of material management include material requirements planning, purchasing, inventory planning and control, and quality control. Maintaining the proper level and placement of inventory is important to protect production from disruptions and ensure customer demand is met. The objectives of inventory control are to balance adequate supply with minimizing costs through techniques like ABC analysis.
The document discusses stores management in manufacturing organizations. It describes the functions of stores departments, which include receiving, storing, and issuing materials to user departments. The document also covers topics like centralized vs decentralized store structures, stores organization and necessary functions. Key points discussed are the role of stores in providing uninterrupted supplies to manufacturing while acting as a buffer between purchasing and marketing.
Industrial management 5 7 8 units [pls visit our blog sres11meches.blogspot.in]Sres IImeches
Materials management involves planning, directing, controlling, and coordinating activities related to material and inventory requirements. It aims to ensure the right materials are available at the right time and in the right quantities, while minimizing costs. Key aspects of materials management include material selection, procurement, inventory control techniques like EOQ and ABC analysis, and storekeeping functions like receiving, storage, and issue of materials. The objectives are to obtain materials at low cost, maintain continuous supply, and control inventory levels.
This document discusses inventory management. It defines inventory as raw materials, work-in-process goods, and finished goods ready for sale. It notes that inventory is an important asset for businesses as it represents a primary source of revenue. The document outlines the functions of inventory, including meeting anticipated demand and guarding against stock-outs. It also discusses inventory costs like ordering costs, holding costs, and stockout costs. Finally, it introduces the concept of economic order quantity, which is the order size that minimizes total inventory costs.
This document discusses the key aspects of materials management. It covers the scope of materials management, which includes all material costs, supply, and utilization. An integrated materials management approach coordinates the functions of planning, purchasing, storage, inventory control, and other related activities. The goals are better accountability, coordination across functions, improved performance and effectiveness, and adaptability to automated systems. Some key functions of materials management include materials planning and control, purchasing, stores management, inventory control, standardization, simplification, and value analysis.
This document provides an overview of materials management. It defines materials management and its objectives. It discusses the importance of materials management and its scope, which includes anticipating requirements, sourcing materials, introducing materials, and monitoring materials status. The document also covers topics like purchasing, production control, transportation, warehousing, information systems, inventory planning, quality management, and planning tools like MRP, ERP, and DRP.
This document provides an overview of materials management and supply chain management. It discusses the evolution of the supply function from a clerical focus in the early 1900s to a more strategic orientation in the 21st century. It also outlines the primary and support activities in a value chain, including inbound logistics, operations, outbound logistics, marketing and sales, service, firm infrastructure, human resource management, technology development, and procurement. Procurement involves identifying, evaluating, selecting, managing and developing sources of supply across the value chain.
The document discusses materials management in organizations. It provides definitions of key terms like "material" and describes the various subsections that make up materials departments, like purchasing, receiving, stores, and dispatching. The objectives of materials management are outlined as well as the relationships between the materials department and other departments. Different types of organizational structures for materials management are described, including function-based, location-based, and process-based models. The roles and functions of materials managers are also summarized.
Material management involves planning, organizing, and controlling the flow of materials from initial purchase through use. It aims to obtain materials of the right quality, quantity, time, place, and cost. Key aspects include demand estimation, procurement, storage, inventory control methods like ABC and VED analysis, maintenance and repair of equipment, and disposal of condemned materials. Effective material management is crucial for providing necessary supplies to healthcare workers and delivering quality services to patients.
This document discusses material management in healthcare. It defines material management and lists its basic functions which include effective purchasing, inventory control, and distribution systems. The goals of material management are to have the right materials in the needed quantities and quality at the lowest possible price. Key aspects covered include demand forecasting, procurement, receipt and inspection of materials, storage, and issue and use of materials. Effective material management is important for delivering quality healthcare services on budget.
Material management involves planning, organizing, and controlling the flow of materials from initial purchase through use. It aims to obtain the right quality and quantity of supplies at the right time and place at the lowest possible cost. Key aspects of material management include demand estimation, procurement, storage, inventory control, and disposal. Adopting sound material management principles can improve organizational efficiency.
Challenges of Small Scale Entrepreneurs in Dodoma Tanzaniainventionjournals
Small businesses irrefutably remain critical to the development of any nation’s economy as they are an excellent, source of employment creation, help in improvement of local skill, and extend aboriginal entrepreneurs. The small scale entrepreneurs who (either registered, unregistered, service or manufacturing or any other type) and have more than three years experience of entrepreneurship comprised the populace of the study. The method of convenience sampling was employed in arriving at the 100 Small firms. The major challenge could be lack of financial (Capital) resources. In the event funding institutions become flexible in their requirements for loan applications, respondents registered their willing to increase the number of their employees; the number of branches and willingness to accept specialized recommendation. In other ways, the only best way to help Small firm’s right of entry economic resources lies in the hands of funding institutions as acceptable and suggested by the best part of undersized entrepreneurs who submitted that the key determinants for seed resources attainment are: fair and low interest rates.
Marketing Efficiency of Agriculture Produce in Saudi Arabia: A Study of Hotat...inventionjournals
This paper attempts to analyse marketingefficiency of agricultural produce in Hotatregion of SaudiArabia. The studydesigned, methodology for data collection, and data analyses .The studybased on primary and secondary data sources such as Ministry of Agriculture, Ministry of Planning, SADAD, FAO other sources from publications and relatedwebsite.Primary data werecollectedthrougha questionnaire interview of a simple randomsample of 350. The use of percentages, mean, and standard deviation, correlation and t-test and multiple regressionanalysis of evolvingsearch data usingstatisticalanalysis software SPSS.Theresultsshowed the diversity and multiplicity of areas that made the SaudiArabian agricultural agenciesmakeeasyprocedures for agricultural marketing projectscovering 14 areas.Thestudy analyse the marketing efficiency of the smallregion in the Kingdom. Vegetablesmarkets of this area found to beeffecientbased on the studyfindings. Local marketsneed to beencouraged by Ministry of Agriculture, KSA.to educate the farmers and update marketing activitiesmay help to improve marketing efficiency in the region.Effective marketing of agriculture products in the Hotatregionthereis urgent need to organizevegetables and fruits festivals on regular basis Local governmentneed to pay attention to the givenrecommendations in the studywillgive positive impact in the marketing efficiency of the region.
The document discusses inventory control techniques used by oil producing firms. It begins with a brief introduction on inventory management and control. It then discusses inventory control costs, levels, and techniques such as economic order quantity. The purpose is to appraise inventory control techniques in oil producing firms and examine their relationship to firm performance and profitability. It will use Nigerian Agip Oil Company as a case study.
This document provides an overview of materials management. It defines materials management as managing the flow of materials in an organization from suppliers to conversion into the finished product. The objectives are to ensure continuous operations and reduce costs. Materials management involves functions like purchasing, inventory control, and distribution. It aims to maximize production while minimizing costs. An integrated approach coordinates departments like purchasing, production, and distribution to optimize benefits.
Inventory Management-A tool for efficiency in Production Operations (Repaired)olusakin akindiPe
This document discusses inventory management in manufacturing small and medium enterprises (SMEs). It notes that inefficient inventory management is a serious problem for SMEs that leads to issues like low capacity utilization and loss of production time. The study aims to examine this problem and provide suggestions to improve inventory management practices. It hypothesizes that determining optimal stock levels, engaging skilled store personnel, and using automated stock control systems can help SMEs optimize resource use and improve overall efficiency. An effective inventory management system is important for SME performance and the broader economy.
This document discusses materials management and its key activities and functions. It defines materials management as the process of planning, organizing, and controlling the flow of materials through an organization. The main activities involved include materials requirements planning, purchasing, inventory control, expediting, transportation, and materials handling. Effective materials management can improve productivity, reduce costs, ensure quality, and smooth production schedules.
Materials management involves planning, organizing, and coordinating activities related to materials from procurement to disposal. It aims to procure the right quality and quantity of materials at the right time and price. The key functions of materials management include materials planning and programming, purchasing, stores, inventory control, transportation, and others. Effective materials management can reduce costs, improve quality, and ensure continuity of supply.
This document is a project report submitted by Sachin Bohra for a Bachelor of Commerce degree. It discusses inventory management practices at RPG Electrade Pvt. Ltd., a consumer electronics company based in Delhi, India. The report provides an overview of the electronics industry in India, describes techniques for inventory management used by RPG Electrade, and outlines the objectives and methodology of the study. Key findings include the need for RPG Electrade to follow Just-in-Time practices and maintain proper stores and spares to avoid shortages. Suggestions are made to calculate economic order quantities more frequently and improve communication across departments. The conclusion emphasizes the importance of accurate inventory management for reducing costs while meeting regulations and demands.
Study on inventory management conducted at reid&taylor(india)ltdProjects Kart
The document provides an introduction and overview of inventory management. It discusses key topics such as:
1) The objectives of inventory management are to specify optimal stock levels to balance product availability with minimizing costs. This involves determining replenishment times and carrying costs.
2) Inventories are typically divided into raw materials, work in process, and finished goods. Effective management of all three is important for production and sales operations.
3) Maintaining inventories involves costs, but they are necessary to facilitate smooth production and meet customer demand given uncertainties in supply and demand. The goal is to determine optimal inventory levels to avoid excess or shortage.
Material management plays an important role in logistics and supply chain management. It includes functions like purchasing, storage, distribution, and inventory control. These functions help ensure efficient material flow and minimize costs. As business concepts have evolved from distribution to integrated logistics to supply chain management, the focus is now on coordination across organizations to create customer value. Outsourcing, mergers and acquisitions are also important new trends that impact modern business operations and the role of material management.
This document discusses material management and inventory control. It defines material management as planning, procuring, storing, and providing materials to support production activities. Key functions of material management include material requirements planning, purchasing, inventory planning and control, and quality control. Maintaining the proper level and placement of inventory is important to protect production from disruptions and ensure customer demand is met. The objectives of inventory control are to balance adequate supply with minimizing costs through techniques like ABC analysis.
The document discusses stores management in manufacturing organizations. It describes the functions of stores departments, which include receiving, storing, and issuing materials to user departments. The document also covers topics like centralized vs decentralized store structures, stores organization and necessary functions. Key points discussed are the role of stores in providing uninterrupted supplies to manufacturing while acting as a buffer between purchasing and marketing.
Industrial management 5 7 8 units [pls visit our blog sres11meches.blogspot.in]Sres IImeches
Materials management involves planning, directing, controlling, and coordinating activities related to material and inventory requirements. It aims to ensure the right materials are available at the right time and in the right quantities, while minimizing costs. Key aspects of materials management include material selection, procurement, inventory control techniques like EOQ and ABC analysis, and storekeeping functions like receiving, storage, and issue of materials. The objectives are to obtain materials at low cost, maintain continuous supply, and control inventory levels.
This document discusses inventory management. It defines inventory as raw materials, work-in-process goods, and finished goods ready for sale. It notes that inventory is an important asset for businesses as it represents a primary source of revenue. The document outlines the functions of inventory, including meeting anticipated demand and guarding against stock-outs. It also discusses inventory costs like ordering costs, holding costs, and stockout costs. Finally, it introduces the concept of economic order quantity, which is the order size that minimizes total inventory costs.
This document discusses the key aspects of materials management. It covers the scope of materials management, which includes all material costs, supply, and utilization. An integrated materials management approach coordinates the functions of planning, purchasing, storage, inventory control, and other related activities. The goals are better accountability, coordination across functions, improved performance and effectiveness, and adaptability to automated systems. Some key functions of materials management include materials planning and control, purchasing, stores management, inventory control, standardization, simplification, and value analysis.
This document provides an overview of materials management. It defines materials management and its objectives. It discusses the importance of materials management and its scope, which includes anticipating requirements, sourcing materials, introducing materials, and monitoring materials status. The document also covers topics like purchasing, production control, transportation, warehousing, information systems, inventory planning, quality management, and planning tools like MRP, ERP, and DRP.
This document provides an overview of materials management and supply chain management. It discusses the evolution of the supply function from a clerical focus in the early 1900s to a more strategic orientation in the 21st century. It also outlines the primary and support activities in a value chain, including inbound logistics, operations, outbound logistics, marketing and sales, service, firm infrastructure, human resource management, technology development, and procurement. Procurement involves identifying, evaluating, selecting, managing and developing sources of supply across the value chain.
The document discusses materials management in organizations. It provides definitions of key terms like "material" and describes the various subsections that make up materials departments, like purchasing, receiving, stores, and dispatching. The objectives of materials management are outlined as well as the relationships between the materials department and other departments. Different types of organizational structures for materials management are described, including function-based, location-based, and process-based models. The roles and functions of materials managers are also summarized.
Material management involves planning, organizing, and controlling the flow of materials from initial purchase through use. It aims to obtain materials of the right quality, quantity, time, place, and cost. Key aspects include demand estimation, procurement, storage, inventory control methods like ABC and VED analysis, maintenance and repair of equipment, and disposal of condemned materials. Effective material management is crucial for providing necessary supplies to healthcare workers and delivering quality services to patients.
This document discusses material management in healthcare. It defines material management and lists its basic functions which include effective purchasing, inventory control, and distribution systems. The goals of material management are to have the right materials in the needed quantities and quality at the lowest possible price. Key aspects covered include demand forecasting, procurement, receipt and inspection of materials, storage, and issue and use of materials. Effective material management is important for delivering quality healthcare services on budget.
Material management involves planning, organizing, and controlling the flow of materials from initial purchase through use. It aims to obtain the right quality and quantity of supplies at the right time and place at the lowest possible cost. Key aspects of material management include demand estimation, procurement, storage, inventory control, and disposal. Adopting sound material management principles can improve organizational efficiency.
Challenges of Small Scale Entrepreneurs in Dodoma Tanzaniainventionjournals
Small businesses irrefutably remain critical to the development of any nation’s economy as they are an excellent, source of employment creation, help in improvement of local skill, and extend aboriginal entrepreneurs. The small scale entrepreneurs who (either registered, unregistered, service or manufacturing or any other type) and have more than three years experience of entrepreneurship comprised the populace of the study. The method of convenience sampling was employed in arriving at the 100 Small firms. The major challenge could be lack of financial (Capital) resources. In the event funding institutions become flexible in their requirements for loan applications, respondents registered their willing to increase the number of their employees; the number of branches and willingness to accept specialized recommendation. In other ways, the only best way to help Small firm’s right of entry economic resources lies in the hands of funding institutions as acceptable and suggested by the best part of undersized entrepreneurs who submitted that the key determinants for seed resources attainment are: fair and low interest rates.
Marketing Efficiency of Agriculture Produce in Saudi Arabia: A Study of Hotat...inventionjournals
This paper attempts to analyse marketingefficiency of agricultural produce in Hotatregion of SaudiArabia. The studydesigned, methodology for data collection, and data analyses .The studybased on primary and secondary data sources such as Ministry of Agriculture, Ministry of Planning, SADAD, FAO other sources from publications and relatedwebsite.Primary data werecollectedthrougha questionnaire interview of a simple randomsample of 350. The use of percentages, mean, and standard deviation, correlation and t-test and multiple regressionanalysis of evolvingsearch data usingstatisticalanalysis software SPSS.Theresultsshowed the diversity and multiplicity of areas that made the SaudiArabian agricultural agenciesmakeeasyprocedures for agricultural marketing projectscovering 14 areas.Thestudy analyse the marketing efficiency of the smallregion in the Kingdom. Vegetablesmarkets of this area found to beeffecientbased on the studyfindings. Local marketsneed to beencouraged by Ministry of Agriculture, KSA.to educate the farmers and update marketing activitiesmay help to improve marketing efficiency in the region.Effective marketing of agriculture products in the Hotatregionthereis urgent need to organizevegetables and fruits festivals on regular basis Local governmentneed to pay attention to the givenrecommendations in the studywillgive positive impact in the marketing efficiency of the region.
Gender Differences in Military Thinking among Active Duty Personnelinventionjournals
The Armed Forces until recently were a male dominated environment, thus women’s military role has brought attention to their physical and mental fitness when performing various military duties. The aim of the present study was the evaluation of gender differences in military thinking during active duty. For this purpose a questionnaire was distributed to 300 military personnel, 100 to each specialty. The questionnaire was structured according to published guidance and graded according to Likert scale. One hundred twenty individuals returned the questionnaire. The questions showing significant statistical differences in the answers of male and female personnel were those concerning beliefs and expectations of their military occupation. Findings showed that the behavior of male personnel compared to female is significantly influenced by their working environment affecting differently the psychology of male and female personnel
Dimensions of National Defence Perspective in International Lawinventionjournals
: The identity of a nation is sometimes measured by the availability existence of military force capability with the availability of sophisticated and latestmilitary equipment, which can be utilized to preserve and defend the territorial integrity, particularly in confronting any threats and security problems internationally, regionally and nationally. The dynamics of the security situation in the region is unstable and various forms of real threats such as terrorism efforts, radicalism, territorial violations and theft of natural resources, is the proof that the country's military strength is very weak and unable to stem and cope the threat. Therefore, Indonesia needs to revitalize the power of national armaments, as an essential element in supporting and defending the sovereignty of the state, involving the power of all components in a defense system that is universal and able to support Indonesia as World Maritime Shaft
Outline of a Multidimensional Theory of Learning by Competences: An Essay abo...inventionjournals
There are several possibilities for understanding complex and polysemic terms such as Education and Learning. In this sense, over the last 30 years a theory of learning in particular has gained enough scientific status and reliability to serve as support for the implementation and regulation of education systems around the world: it is the Theory of Learning by Competencies. This theory, however, is subject to refinements and modifications, especially when confronted with scientific models such as Metaciência Social (created by Pablo Bispo dos Santos) and Unified Field Theory (created by Albert Einstein). This paper presents an essay to discuss the possibility of creating and applying (to several objects of study) a new methodology of educational evaluation called: Holospheric Learning System.
Selection of Species in the Reservoir Ecosystem for Area of the Boca Do Rio N...inventionjournals
Considering the importance of the dune ecosystems for the protection of areas and aquifers, this study was carried out presenting the selection of some plant species of the restinga ecosystem that could compose a coastal stretch of the neighborhood of Boca do Rio in the city of Salvador, Bahia, Brazil. The area to be recovered is changed. The decharacterization of the environment is due to the intense depletion of its natural resources caused by the disordered occupation. In this sense, it becomes a challenge to the selection of plant species that associate or that adapt to the existing conditions in this environment. In this way nineteen plant species of arboreal extract were selected (19), seven (07) seven shrubs and (06) six shrubs. However, in view of this scenario, it is pertinent to caution, recommend planting plant species that adapt to the adverse conditions of coastal zones and accompany them for assessments and possible corrections. Thus, we will have a greater control of the anatomical and physiological conditions of the vegetal species planted in this place.
Business strategy is dependent on the management team possessing high quality information, most often of a quantitative nature. Particularly in a business environment that is increasingly globalized and influenced by both technology and social media, the ability of management to react with flexibility is key to organizational success. Accounting professionals, specifically management accountants already embedded within various functional areas, possess the necessary competencies to meet the data demands of a stakeholder environment. Building strategy begins with an understanding of broader business trends, and the ability to translate broader trends into quantitative data. Adopting a strategic headset and more strategically oriented business outlook is a concept that continues to proliferate the academic and business press. Accounting professionals have an opportunity to leverage existing competencies, technological advances, and the need for quantitative data in a fast changing environment. What remains to be done is an analysis of these trends, and an understanding of how accounting professionals can translate potential into business decision making.
Behavioral Screening with a Translated Measure: Reliability and Validity Evid...inventionjournals
This document summarizes a study that evaluated the reliability and validity of a Spanish translation of the Preschool Behavior Screening System (PBSS), called the PBSS Parent Spanish Form (PBSS-PSF). The study involved administering the PBSS-PSF to 49 Spanish-speaking parents of preschool children. Results found moderate to excellent internal consistency for the PBSS-PSF. Correlations between phases of the PBSS-PSF were acceptable, and correlations with an existing Spanish behavioral screening measure (BESS) were also acceptable. Overall the results provide promising preliminary evidence for the reliability and validity of scores from the PBSS-PSF. Further refinement of the translated measure is recommended.
Leadership And Competence of Some Private Bank Instructor In Jakartainventionjournals
1. The study investigated the effects of leadership and competence on the work motivation of private bank instructors in Jakarta.
2. It found that leadership, competence, and the combination of leadership and competence all had a positive and significant influence on work motivation. Specifically, the dimensions of human relationships in leadership and personality in competence were the most dominant factors.
3. The model showed that leadership and competence jointly explained 10.2% of the variation in work motivation, while other unspecified variables explained the remaining 89.8%.
The Behavior of Some Peach and Nectarine Cultivars to Powdery Mildew (Sphaero...inventionjournals
This document summarizes research on the behavior of four peach and nectarine cultivars (Red Star, Venus, Roajal Black, and Gomea) to powdery mildew (Sphaerotheca pannosa) in Albania from 2014-2016. Disease assessments were conducted on the cultivars using a disease index scale. Statistical analysis found significant differences in powdery mildew susceptibility between the cultivars. Red Star and Gomea had the highest disease indices, while Roajal Black showed the most resistance, with indices ranging from 16.31-30.77% across cultivars. All cultivars were classified as moderately resistant to powdery mildew.
Relación Entre El Desarrollo Neuropsicológico Y La Creatividad En Edades Temp...inventionjournals
Neuropsychological maturity is a crucial factor for the school population because it can be an indicator of a high or low school performance. Moreover, creativity is a factor that will not only allow the development of original ideas but also will provide a more divergent thinking. Therefore, this study tries to establish whether there is a direct relationship between neuropsychological maturity and level of creativity. The study is home to a population of 30 subjects without learning disabilities enrolled in primary education with an age between 7 and 11 years. To carry out the study, it has been used Maturity Questionnaire Neuropsychological testing CUMANES and then CREA. Once passed all tests, we used the statistical Pearson, which concludes that exists between creativity and neuropsychological maturity is a direct positive correlation.
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The Impact of Inventory Management on Manufacuring Industry
1. International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org || Volume 6 Issue 1 || January. 2017 || PP—01-09
www.ijbmi.org 1 | Page
The Impact of Inventory Management on Manufacuring Industry
Dr. J.S.V.Gopala Sarma
Professor& HOD, Department of MBA, Institute of Aeronautical Engineering, Dundigal, Hydetrabd.
ABSTRACT: Inventory is generally considered to comprise in three main areas which are raw materials,
work in progress and finished goods. Where these are held and in what quantities, and how they are managed
will vary significantly from one organization to another. The activities of inventory management involves are
identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring
item usages, reconciling the inventory balances, and reporting inventory status. In order to have clear inventory
management, a company should not only focus on logistic management but also on sales and purchase
management. Inventory management and control is not only the responsibility of the accounting department and
the warehouse, but also the responsibility of the entire organization. Actually, there are many departments
involved in the inventory management and control process, such as sales, purchasing, production, logistics and
accounting. All these departments must work together in order to achieve effective inventory controls. Inventory
includes raw material in progress, finished products, general Suppliers and equipment etc. inventory control
may defined as systematic location, storage and Recording of goods in such a way that desired degree of service
can be made to the operating shops at minimum ultimate cost. The need for inventory control is to maintain
stock of goods and ensure Manufacturing according to the production schedule based on sale requirement and
the lowest possible ultimate cost to the customer. Every enterprise needs inventory for smooth running of
activities, it serves as link between production and distribution process and there is general time lag between
the recognition of a need and its fulfillment. The greater time lag, the higher the requirement for inventory. The
unforeseen fluctuation in demand and supply of goods also necessitate the need for inventory as it provides
cushion for future price fluctuation. This paper includes the concept of inventory management, nature of
inventory management, materials management techniques and inventory accounting.
Keywords: Concept and Nature of Inventory Management, Materials Management Techniques, Inventory
Accounting, Inventory Control and Its Impact on Cost.
I. INTRODUCTION
Inventory management is one of the most important business processes during the operation of a
manufacturing company as it relates to purchases, sales and logistic activities. It concerned with the control of
stocks throughout the whole supply chain. Inventory control sits at the data level where the day-to-day business
is organized. Activities here are data driven and are primarily concerned with short-term planning and recording
of events. Inventory control is concerned with maintaining the correct level of stock and recording its
movement. It deals mainly with historic data. Inventory is an the goods as raw material in progress, finished
products, general Suppliers and equipment etc. inventory control may defined as systematic location, storage
and Recording of goods in such away that desired degree of service can be made to the operating shops at
minimum ultimate cost. The need for inventory control is to maintain stock of goods and ensure Manufacturing
according to the production schedule based on sale requirement and the lowest possible ultimate cost to the
customer.
Every enterprise needs inventory for smooth running of activities it serves as link between Production
and distribution process there is general time lag between the recognition of a need and Its fulfillment .the
greater the time lag, the higher the requirement for inventory. The unforeseen Fluctuation in demand and supply
of goods also necessitate the need for inventory as it provides cushion for future price fluctuation. Inventory is
generally considered to comprise in three main areas which are raw materials, work in progress and finished
goods. Where these are held and in what quantities, and how they are managed will vary significantly from one
organization to another. The activities of inventory management involves are identifying inventory
requirements, setting targets, providing replenishment techniques and options, monitoring item usages,
reconciling the inventory balances, and reporting inventory status. In order to have clear inventory management,
a company should not only focus on logistic management but also on sales and purchase management. Inventory
management and control is not only the responsibility of the accounting department and the warehouse, but also
the responsibility of the entire organization. Actually, there are many departments involved in the inventory
management and control process, such as sales, purchasing, production, logistics and accounting. All these
departments must work together in order to achieve effective inventory controls.
2. The Impact Of Inventory Management On Manufacuring Industry
www.ijbmi.org 2 | Page
In this context it is proposed to conduct a study in a repute public sector undertaking covering
inventory management‟s aspect and giving suggestions for implementing any. Encored Engineering is chosen,
as it is a central public sector unit of long standing having diversified product portfolio with variety of material
inventory having control implications. The study aims to analyze, discuss, conclude and suggest measures for
further inventory controls.
Objectives Of Inventory Management
1. The most important objective of inventory control is to determine and maintain an optimum level of
investment in the inventory.
2. To ensure continuous supply of materials spares and finished goods so that production should not suffer at
any time and the customer needs should also be met
3. To avoid both over stocking and under stocking of inventory.
4. To keep material cost under control so that they contribute in reducing cost of production and overall cost.
5. To minimize losses through deterioration, pilferage, wastage, obsolescence and damages.
6. To ensure right quality goods at reasonable prices. Suitable quality standards will ensure proper quality of
stocks. The price analysis, the cost analysis and value analysis will ensure optimum cost of acquisition.
II. NEED FOR STUDY
The investment in inventory is very high in most undertakings engaged in manufacturing, wholesale
and retail trade. The amount of investment is sometimes more in inventory than in other assets. In India a study
of 29 major industries has revealed that the average cost of material is 64 paisa and the cost of labor and
overheads is 36 paisa out of a rupee. About 90% of working capital is invested in inventories. The main reason
attributed for loss making is financial indiscipline in managing the resources particularly in inventory
management. For an organization, the product profitability is of paramount importance considering standards
and budgets. Needless to say, that in this context, inventory management assumes lot of significances. Hence,
the inventory management determines and specifies the following factors like what to purchase, where to
purchase, how to purchase, from where to purchase, where to store etc. will be critical factor hence forth it
becomes a crucial factors to undergo a detailed analysis to find an efficient system of inventory. Hence an
attempt has been made to study the inventory management with reference to Encored Engineering.
III. CONCEPT OF INVENTORY MANAGEMET
There are conflicting of different department heads over the issue of inventory. The finance manager
will try to invest less in inventory because for him it is an idle investment, where as production manager will
emphasize on acquiring more and more inventory as he does not management is to keep the stocks in a such
neither way that neither there is over-stocking or under-stocking. The problem can also be resolved by adoption
of JUST IN TIME inventory management‟s techniques
The overstocking will mean a reduction of liquidity and starving of other production processes, under-
stocking on the other hand, will result in stoppage of work. The investments in inventory should be kept within
reasonable limits. Every enterprises needs inventory for smooth running of its activities. It serves as a link
between production and distribution processes.
There is, generally, a time lag between the recognition of a need and its fulfillment. The greater the
time - lag the higher the reconcilement for inventory, the unforeseen fluctuations in demand and supply of goods
also necessitate the need for inventory .it also provide a cushion for future price fluctuations.
The investment in inventories constitutes the most significant part of current assets/working capital in
most of undertakings. Thus it is very essential to have proper control and management of inventories. The
purpose of inventory management is to ensure a variability of materials is confident quality as and when
required and also to minimize investment in inventories.
It is necessary for every management to give proper attention to inventory management. A proper
planning of purchasing handling, storing and accounting should form a part of inventory management. It will
determine.
1. What to purchase?
2. How to purchase?
3. From where to purchase?
Corporate Finance
Inventory constitutes value of film‟s raw materials, work- in progress, used in operation, and finished
good. Since inventory value change with price fluctuation it is important to know the method of valuation. There
are number of inventory valuation method, the most widely used are first in first out (FIFO) and last in first out
(LIFO). Financial statement normally indicate the basis of inventory valuation, generally the lower figure or
either cost price or current market price.
3. The Impact Of Inventory Management On Manufacuring Industry
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Personal finance:
List of all assets owned by an individual and values of each, based on the cost, market value, are both. Such
inventories are usually for property insurance proposes and are sometimes required with applications for credit
Securities:
Net long or short position of a dealer or specialist. Also, securities a bought held by a dealer for later resale
IV. NATURE OF INVENTORY MANAGEMENT
Inventory includes the following things:
Raw materials:
Unfinished goods in the manufacturing of a product. For example a steel maker uses iron or and other
metals in the producing steel. Publishing company uses paper and ink creates books, newspapers, and
magazines. Raw material is carried on a company‟s balance sheet as inventory in the current accounts section.
Work in progress (WIP):
There letter abbreviation with several meaning as described below, work in progress generally signifies
a project that will not be billed in one attempt or even several. Sometimes as WIP list, synonymous with to do
list .WIP as asset means the portion of work i.e., complete but no yet billed. WIP is good or goods in various
stages of completion. Throughout the plan, including all material that has been reeled for initial processing up to
completely processed material pending final inspection and occupation as finished goods.
Finished goods:
These are the goods, which are for the consumers. The stock of finished goods provides as buffer
between production and marker. The purpose of maintaining inventory is to ensure proper supply of goods to
customers. In some concerns the production is under taken on order basis, in these concerns there will be a need
for finished good. The need for finished goods inventory will be more when production is undertaken in general
without waiting for specific orders.
Spares:
Spares also form a part of inventory. The consumption pattern of raw materials, the Stocking policies
of spares are different from industry to industry. Some industries like transport will require more spares that the
other concerns. The costly spares like engine, maintenances spare etc. are not discovered after use; rather they
are read position for further use. All decisions about spare are based on the financial cost of Inventory on such
spares and costs that may arise due to their non-availability.
Consumables:
These are materials, which are needed to smoothen the process of production. These materials do not
enter directly into production but they act as catalysts. Consumables may be classified according to their
consumption and critical. Generally, consumable stores do not create any supply problem and from small part of
production cost. There can be instance where these materials may account for more value than the raw material.
The fuel oil may from a substantial part of the cost.
Safety stock inventory:
To avoid customer service problems and the hidden cost of unavailable components, Companies,
companies hold safety stock. Safety stock inventory protects uncertainties in demand, lead-time and supply
safety stock are desirable when suppliers fail to deliver the desired quality on the specified date with acceptable
quality or when manufactured Items have significant amounts of scrap or rework. Safety stock inventory ensure
that operations are disrupted when such problems occur, allowing subsequently to continue.
To create safety stock, a firm places an order for delivery is typically needed. The replenishment order
therefore arrives ahead of time, giving cushion against uncertainty.
Cycle inventory:
The portion of inventory that varies directly with lot size is called inventory. Determining how
frequently to order, and in what quantity, is called lot sizing. Two principals apply the lot size, Q, varies directly
with the elapsed time (or) cycle time between order every five weeks, the average lot size must be equal to five
weeks demand
The longer the time between order for a given item, the grater the cycle inventory must be at the
beginning of the interval, the cycle inventory is at its maximum are Q at the end of the interval, just before a
new lot arrives, cycle inventory drops to its minimum or zero the average cycle inventory is the average of these
two extremes
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Average cycle inventory = Q+0 = Q
2 2
This formula is exact only when the demand rate is constant and uniform. However, it does provide a
reasonably good estimate even when demand rates are not constant. Factor other than the demand rates (e.g.,
scrap losses) also may cause estimating errors when this simple formula is used.
V. MATERIALS MANAGEMENT TECHNIQUES
Economic order quantity:
There are two basics questions relating to materials management:
What should be the size of the order?
At what level should the order be placed
To answer the first question the basics economic order quantity model is helpful. If the firm is being
raw materials, it has to be purchased for each replenishment. This problem is called order quantity problem and
the task of the firm is to; determine the optimum of EOQ.
The determination of the appropriate quantity to be purchased in each lot to replenish stock as a
solution to the order quantity problem necessitate resolution goals buying in large quantities implies a higher
inventory level which will assure
Smooth production/sales operations
Lower ordering or set-up costs
But it will involve higher carrying costs. On the other hand small orders will reduce the carrying costs
of inventory by reducing the average material level but the ordering costs would increases as there is a
likelihood of interruption the operations due to stock-outs.
A firm should place neither too lame nor too small orders on the basis of trade off between the benefits
from the availability of inventory and the cost of carrying.
To take enough to avail the concessions in purchasing materials.
Ensuring that the materials of requisite specifications and quality have been received in good conditions.
Determining an optimum material level involves two types of costs:
Ordering costs and
Carrying costs
Orering costs:
The terms ordering cost is used in case of raw materials and includes the entire costs of acquiring ram
materials. They include the costs incurred in following activities: purchase ordering transporting, receiving,
inspecting. Ordering costs increase the number if orders; thus more frequently the material is acquired the firm‟
ordering cost. On the other hand, if the firm maintains large inventory levels, there will be few orders placed and
ordering costs will be relatively small. Thus, the ordering costs decrease with increasing size of inventory.
Carrying costs:
Costs incurred for maintaining a given level of inventory are carrying costs. They include storage,
taxes, insurance, deterioration; obsolescence incurred in recording and providing special facilities such as
fencing, lines etc.
Carrying cost vary with inventory size. This behavior is contrary to that of ordering costs, which
decline with increase in inventory size. The economic size if the inventory would thus depend in trade-off
between costs and ordering costs.
Ordering and carrying costs trade off:
The optimum inventory size is commonly referred to as economic order quantity. It is that order size at
which annual total costs of ordering and holding are minimum.
To find this formula is:
EOQ = (2AO/C)
Where, A = Annual Total Requirement.
O = Ordering Costs.
C = Carrying costs.
Assumptions of EOQ:
The forecast usage/demand for a given period, usually one year, is known
The usage/demand is even throughout the period.
Inventory orders can be replenished immediately (there is no delay in placing and receiving orders).
There are two distinguishable costs associated with inventories: costs of ordering and costs of carrying.
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The cost per order is constant regardless of the size of order.
The cost of carrying is a fixed percentage of the average value of inventory.
VI. ANALYSIS OF INVESTMENT IN MATERIAL
It is a major responsibility of the financial manager to over- sees the management of management of
material since materials represent investment of the firm, large funds in practice. A decision to determine or
change the level of material is an investment decision. The analysis should therefore involve an evaluation of
profitability of investment of investment in material. The goal of material policy will maximize the firm, s
value. The material policy will maximize the firm, value at a point at which marginal (incremental) return from
the investment in material equal the marginal (incremental) cost funds used to finance the investment in
material. The cost of funds in the required rate of return to suppliers of funds and it funds and it depends on the
risk of the investment opportunity.
Incremental analysis:
The investment in material should be analyzed involving the following four steps:
Estimation of operating profit
Estimation of investment in material.
Estimation of rate of return on investment in material.
Comparison of the rate of return on investment with the cost funds
The incremental analysis should be used to compute the values of the operating profit, investment in
inventory, rate and cost of funds. A change in the material policy is desirable if the incremental rate of return
exceeds the require rate of return.
Selective Inventory Control / ABC Analysis
Usually a firm has to maintain several types of materials. It is not desirable to keep the same degree of
control on items. The firm should pay maximum attention to those items where value is the highest. The firm
should, therefore classify the materials to identify which items should receive the most effort in controlling. The
firm should be selective in its approach to control investment in various types of materials. This analytical
approach is called ABC analysis and tends to measure the significance of each item of material in terms of its
value. The high value items are classified as „A items‟ and would be under the biggest control. „C items‟ present
relatively least value and would be under simple control. „B items‟ fall in between these two categories and
reasonable attention of management. The ABC analysis concentrates on important items and is also known as
control by importance and exception. As items are classified in the importance of their relative value, this
approach is also known as proportional value analysis.
The following are involved in implementing the ABC analysis:
Classify the items of materials, determining the expected use in units and price per unit for each item.
Determine the total value of each item by multiplying by expected by its units price.
Rank the items in accordance with the total value, giving first rank to with highest total value and so on.
Complete the ratios (percentage) of numbers of units of each item to total units of all items. And the ratio of
the total value of each item to total of all items.
Combine items on the basis of their relative value to form three categories A, B and C.
VII. INVENTORY ACCOUNTING:
The way in which a company accounts for its inventory can have a dramatic effect on its financial
statements. Inventory is a current asset on the balance sheet. Therefore the valuation of inventory directly affects
the inventory, total current asset, and total asset balances. Companies intend to sell their inventory, and when
they do, it increases cost of goods sold, which is often a significant expense on the income statement. Therefore
how a company values its inventory will determine the cost of goods sold amount, which in turn affects gross
profit (margin), net income before taxes owed, and ultimately net income.
Its clear, than that a company„s inventory valuation approach can cause aripple effect throughout its
financial picture. One my think inventory value is relatively simple. For a retailer, inventory item is sold, the
inventory should be reduced (credited) accost of goods should be increased (debited) for the amount paid for
each inventory them.
This works if a company is operating under the specific identification method. That is, a company
knows the cost of every individual item that is sold. This method works well when the amount of inventory a
company has is limited and each inventory item is unique. Examples would include car dealership, jewelers, and
art galleries.
The specific identification method, however, is cumbersome in situation where accompany owns a
great deal of inventory and each inventory item is relatively indistinguishable from each other.
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As a result, other inventory valuation methods have been developed. The best known of these are the
FIFO (first in first out) and LIFO (last in first out) methods.
First in first out (FIFO):
Method accounting inventory whereby, quite literally, the inventory is assumed to be sold in the
chronological order in which it was purchased. For example, the following formula is used in computing the
cost of goods sold:
Under the FIFO method, inventory costs flow the oldest purchase forward, with beginning inventory as
the starting point and ending inventory representing the most recent purchases. The FIFO method contracts with
the LIFO or last in, first out method, which is FIFO in reverse. The significance of the difference becomes
apparent when inflation or deflation affects inventory priced. In an cost of goods sold figure, and a higher cost
of goods sold figure, and a higher gross profit. LIFO, on the other hand, produces a lower ending inventory, a
higher cost of goods sold figure, and a lower reported.
Last in first out (LIFO):
Method of inventory valuation that assumes merchandise is sold in the order of its receipt, the first
price out. Hence cost of sales is based on older dollars ending inventory is reflected at the most recent prices.
Assume the following data regarding inventory during the year: LIFO (last – in first out) on the other hand, is an
accounting approach that assumes recently acquired items are the first ones sold. Therefore, the inventory that
remains is always the oldest inventory; during economic period in which prices are rising this inventory
accounting method yields a lower ending inventory, a higher cost of goods sold, a lower gross profit, and a
lower taxable income. The LIFO method is preferred by many companies because it has the effect of reducing a
company‟s taxes, thus increasing cash flow. However this attributes of LIFO are only presenting an inflationary
environment.
Average cost method:
In an average cost method of pricing all materials in stock or so mixed that a Prices are formed. Average cost
may be of two types
Simple average cost:
In an average cost method of pricing all materials in stock or so mixed that a price based on that
average price. Though this is simple method pricing material but particularly this method does not give good
result. The total cost of materials is not observed in this method.
Weighted average method:
In this method that the total cost of all materials is divided by the total number of items in the stock.
The price calculated in this way has not been for issue of materials up to the time a fresh purchase has not been
made. After a fresh purchase, the quantity will be added to the earlier balance quantity and material cost will be
changed total cost a fresh price is calculated by dividing the changed total cost by the number of units in stock
after the purchase. A new price list calculated where even afresh purchase is made.]
Base stock method:
In this method some quantity of materials is assumed to be necessary for keeping the concern going.
The quantity is not issued unless otherwise there is an emergency. This material which as not issued as is kept in
stock is known as base stock...
Standert price met:
The issue price of the material is pre determine or estimate in this method. The standard price is based
on market condition, uses rate, handling felicities etc., the material are priced at the standard price irrespective
of price for various purchases.
VIII. INVENTORY CONTROL AND ITS IMPACT ON COST
Value wise inventory and consumption analysis are brought out on quarterly basis indication RM: SS,
CT, PM are valued at cost. A class items which are 70%, b class item which are valuing 20%, c class items
which are valuing 10%of total inventory are brought out for verification of internal audit. C class items are
verified by the stores and to ht extent certificate is issued at the year and regarding the correctness. Physical
balances are verified with the carded and the differences are intimated to stores and financial analysis wing of
the group by the internal audit. FAW of the group verifies the rectification entries the rectification entries i.e.,
shortage items value are changed off to physical inventory variation and the excess quantities are adjusted in the
inventory ledger after obtaining the competent authority‟s approval.
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Finished Goods
These are the goods, which are ready for the consumers. The stock of finished goods privies a buffer between
production and market.
Finished Goods held in Inventory = Finished Goods
Monthly Consumption
Table 1.1: Monthly Finished Goods held in Inventory
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Finished Goods 1059 1446 651 1183 946 649 635
Net Sales 47002 5711 89218 84177 72231 65188 91790.61
Monthly Consumption 3917 4760 7435 7015 6019 5432 7649.21
No of monthly Finished
goods held in inventory
0.27 0.303 0.087 0.168 0.157 0.119 0.082
From the above Table 1.1 it can be observed that the average finished goods stock held during the
period of study is 0.20 months. There is a trend of holding comparable net sales and monthly consumption only
in the year 2006-07, in all the other years the monthly consumption inventory of finished goods in fairly
constant irrespective of rising {2010-11 to 2011-12} or falling trend {2007- 08 to 2010-11} in net sales of the
company.
Work In Progress
The work in progress is that stage of stocks, which are in between raw material and finished goods.
Work in Progress held in Inventory = Work in Progress
Monthly Consumption
Table 1.2: Monthly Work-in-Progress held in Inventory
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Work in Progress 6193 8350 3877 4260 3372 3799 3233.87
Cost of Production 55762 62381 81160 73880 67710 62078 73480
Monthly Consumption 4647 5198 6763 6157 5643 5173.18 6123.33
1.33 1.61 0.57 0.69 0.6 0.73 0.52
From the above Table 1.2 it can be stated that the corporation held peak WIP during the year 2005 –
2006 and around 0.60 months on an average every year during next 3 years. The work in progress rose
asymmetrically in the year 2006-07 raising with the cost of production and falling while the cost of production
rose in the year 2007-08. It remained fairly constant during all the rest of the period even while the cost or
production rose steeply during the period 2007-08 to 2007-08 and 2010-11 to 2011-12 and when the cost of
production fell steeply during the period 2007-08 to 2010-11.
Sundry Debtors
Sundry debtors are those people who purchase on credit terms from the company and hence owe money to the
company.
Debtors held in Inventory = Sundry Debtors
Monthly Consumption
Table 1.3: Monthly Sundry Debtors held in Inventory
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Sunday Debtors 19865 16681 31344 42946 36774 79468 98870.9
Gross Sales 56875 67412 100056 93455 77067 70029 100590.2
Monthly Consumption 4740 5618 8338 7788 6422 5836 8383
No of months Debtors held 4.19 2.97 3.76 5.73 5.73 13.6 16.9
From the above Table 1.3 it can be found that the credit Policy of the corporation is one-month credit;
however organization has never maintained one-month credit during the study of the project. There is slackness
in the debtor collection machinery as it is evidenced by the graph above, which shows the abnormal rise in
sundry during the period 2009-10 to 2011-12. The sundry debtors have in fact overshadowed the gross sales
during the above period. It calls for urgent corrective measures.
Working Capital
The term working capital may be defined as the excess of total current assets over current liabilities
Working Capital = Gross Working Capital Held
Cost of Production
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Table 1.4: Working Capital
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
No. of Months Gross Working
Capital held up (a)
12559 14531 10158 10710 6622 7681 7314
Cost of Production (b) 4647 5198 6763 6157 5643 5173.18 6123.33
Working Capital (a/b) 2.7 2.8 1.5 1.74 1.17 1.48 1.19
From the above Table 1.4 it can be observed that during the period of study the peak working is 2.70
during 2005-06 and reduce year and reached lowest during 2009-10 for 1.17months. Gross working capital has
shown a tendency of over stocking in the period 2005-06 to 2007-08. It may be one of the reasons for the
cyclically of the cost of production as is evidenced in the above graph of a rise up to 2007-08 and a fall till
2010-11 followed again by arise till 2011-12.
Inventory Turn Over Ratio
Inventory turnover ratio measures the number of items a company sells its inventory during the year. A
high inventory turnover ratio indicates that the product is selling well. The inventory turnover ratio should be
done by inventory categories or by individual products.
Inventory Turnover Ratio = Cost of Goods Sold
Average Inventory
Table 1.5: Inventory Turnover Ratio
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Sales(a) 56874.7 67411.5 100005.6 93455.4 11066.6 70029.3 10059.2
Gross profit (b) 4564.18 9937.16 17372.6 144890.4 6927.01 6222.8 20701.7
Cost of goods sold(a-b=c) 52310.49 57474.49 82683.22 78965.66 70139.75 63806.23 79888.38
Inventory opening stock(d) 13035.73 12559.82 14531.93 10158.9 10710.86 6622.64 7681.96
Closing stock (e) 12559.85 14531.93 10158.94 10710.86 6622.64 7681.96 6855.84
Average inventory (f) (d-e=f) 12797.7 13545.88 12345.44 10434.9 8666.75 7152.3 7268.9
Inventory Turnover Ratio (c/f) 4.09 4.24 6.7 7.57 8.09 8.92 10.99
From the above Table 1.5 it can be stated that the inventory turnover has increased from 4.09 to 10.09
from the year 2005-06 to 2011-12 which is the indicative of good inventory management despite an obvious
cyclicality in sales and cost and of goods sold. The good news has to be tempered with the fact that sundry
debtor‟s management has been poor.
Findings
It is found that the inventory turnover ratio has been increased during the 2011– 2012 which shows a good
inventory.
It is observed that the work in progress turnover ratio has been decreased during the year 2011 – 2012,
which shows a bad work in progress.
It is stated that the percentage of raw materials on cost of production has been increased during the year
2011 – 2012 which is an effective utilization of raw material.
It is found that the raw materials inventory turnover ratio has decreased during the year 2011 – 2012 which
shows that there is no proper utilization of raw material.
Suggestions
Aim of Inventory management should be clearly spelt as „to keep such a way that neither there is over
stocking or under stocking‟.
Organization needs to upgrade of the technology, which in turn increases effective utilization of raw
material.
Debtors which remained un-collected for a long period and who are no longer dealing in the company need
to be written off.
Organization should explore the possibility of switchover to just in Time, kanban [Card Signal] philosophy
of inventory management as propagated by TOYOTA Company.
IX. CONCLUSION
Inventory management is an import function which affects the reliability of stabilized production &
profitability of the organization. ENNORE ENGINEERING is a multi product organization catering to different
customers based on divergent technologies the inventory procurement for various range of product is quite high.
It is observed that there are frequent changes in specification by the customers rendering the already procured
inventory either obsolete or non-moving. The percentage of raw material on cost of production is found to high
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in year 2007-2008 which indicates organization has an effective utilization of the material inventory, which is
showing signs of inconsistency, which trend needs to be reversed. In spite of the above constraints there is
reasonably a good control noticed as reflected in the period of holding of inventories and inventory turnover
ratio. The sundry debtor collection machinery is slack which needs to be revved up. Work in progress in 2011-
12 is contrary to the trend which needs to be investigated. Raw material inventory turnover ratio is not in-sync
with total material consumed trends.
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