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•ABC CLASSIFICATION.
•HML CLASSIFICATION.
•VED CLASSIFICATION.
•SDE CLASSIFICATION.
•FSN CLASSIFICATION.
•EOQ CLASSIFICSTO...
ABC Analysis:
 One of the widely used techniques.
 Objective is to vary the expenses associated with control ,
according...
Procedure:
 List each inventory by number or by designation.
 Determine annual vol of usage and money value.
 Multiply ...
Example:
Inventory Item Annual use Percentage of total
usage
101 3,000 0.3
106 4,00,000 40.0
117 7,000 0.7
High Medium Low(HML):
 The HML classification is same procedure as adopted in ABC.
 The core difference is HML classific...
Vital Essential Desirable:
 They are done to determine the criticality of an item and
its effect on production and other ...
SDE Classification:
 The SDE is based upon the availability of items.
 Here „S‟ refers to „Scarce‟ items
 „D‟ refers to...
FSN Analysis:
 The abbreviation for FSN in “Fast moving, Slow moving and
Non moving”.
 Here in this analysis, the date o...
SOS Analysis:
 ‘S‟ stands for Seasonal items and „OS‟- Off Seasonal items.
 In general it is merit to seller to buy seas...
XYZ Analysis:
 This classification is based on the value of inventory of materials actually held in
stores at given time....
GOLF Analysis:
 This stands for Govt, Open mkt, Local or Foreign source
of supply.
 For certain items, imports are canal...
Inventory control techniques
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Inventory control techniques

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Inventory control Techniques

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Inventory control techniques

  1. 1. •ABC CLASSIFICATION. •HML CLASSIFICATION. •VED CLASSIFICATION. •SDE CLASSIFICATION. •FSN CLASSIFICATION. •EOQ CLASSIFICSTON. •MAX-MINIMUM SYSTEM. •TWO BIN SYSTEM
  2. 2. ABC Analysis:  One of the widely used techniques.  Objective is to vary the expenses associated with control , according to potential savings associated with a proper level of control.  The ABC approach means of categorizing the inventory items into three classes „A‟;‟B‟;‟C‟.  The categorizing is done according to the turnover of the various products.
  3. 3. Procedure:  List each inventory by number or by designation.  Determine annual vol of usage and money value.  Multiply each item annual vol of usage and rupee value.  Select top 10 percent of all items which have high repee percentage classify them as „A‟.  And accordingly.
  4. 4. Example: Inventory Item Annual use Percentage of total usage 101 3,000 0.3 106 4,00,000 40.0 117 7,000 0.7
  5. 5. High Medium Low(HML):  The HML classification is same procedure as adopted in ABC.  The core difference is HML classification unit value is the criterion and not the annual consumption value.  The inventories should be place in descending order and it is up to mgmt to fix limits of these three categories.  Example: the mgmt may decide all units with unit value of Rs 2,000 and above will be H items…..
  6. 6. Vital Essential Desirable:  They are done to determine the criticality of an item and its effect on production and other services.  It is specially used for classification of spare parts.  If the part is vital most it is given „V‟, if it is essential then is given as „E” ,if it is not so essential it is given as „D‟.  For „V‟ items large stocks are maintained while for „E‟ items minimum stock is enough.
  7. 7. SDE Classification:  The SDE is based upon the availability of items.  Here „S‟ refers to „Scarce‟ items  „D‟ refers to „Difficult‟ items  „E‟ refers to „Easy to acquire‟  This is based on problems faced in procurement, were some strategies are made on purchasing.
  8. 8. FSN Analysis:  The abbreviation for FSN in “Fast moving, Slow moving and Non moving”.  Here in this analysis, the date of receipt or the last date of issue, which ever is later, to determine the no.of months which have lapsed from last transaction.  FSN is helpful in identifying active items which need to be reviewed regularly and surplus items and non-moving items are examined.
  9. 9. SOS Analysis:  ‘S‟ stands for Seasonal items and „OS‟- Off Seasonal items.  In general it is merit to seller to buy seasonal items at lower price and keep inventory and sell them at high price during Off seasons.  If not the seller has to buy the goods at higher prices during Off seasons.  Decisions are taken based on the fluctuations and availability.
  10. 10. XYZ Analysis:  This classification is based on the value of inventory of materials actually held in stores at given time.  This helps to control the average inventory model value.  „X‟ items which are 10% of no.of items stored, but accounting for 70% of the total inventory value.  „Y‟ items are 20% of no.of items stored and account for 20% of total inventory value.  „Z‟ items are 70% of no.of items stored and account for 10% of the total value.  This analysis focuses on efforts to reduce the inventory of these items.
  11. 11. GOLF Analysis:  This stands for Govt, Open mkt, Local or Foreign source of supply.  For certain items, imports are canalized through govt agencies viz; State trading corp, Minerals and Metals Trading Corp, Indian drugs and Pharma.  Here no control techiques are not applied.

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