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1. INVENTORY
MANAGEMENT
NAME : VIVEK DILIPBHAI GURAV
REG. NO. : WRO0566621
BATCH NO : 430
SUBMITTED TO:MRS. DHVANIKA
SHAH

2. WHAT IS INVENTORY ?
 Inventory Or Stock Refers To The Goods And Materials That
A Business Holds For The Ultimate Purpose Of Resale (Or Rep
air).
ROW
STOCK
WORK IN
PROGRESS
FINISHED
GOODS

3. INVENTORY
MANAGEMENT
Inventory management is primarily about
specifying the size and placement of stocked goods.
Inventory management is required at different
locations within a factory or within multiple locations
of a supply network to protect the regular and
planned course of production against the random
disturbance of running out of materials or goods.

4. ADVANTAGES OF INVENTORY
MANAGEMENT :
Appreciation in Value
Uncertainty
Seasonal Demand
Time
Obsolescence

6. Setting up of stock levels :
 Re-ordering level
=Maximum Rate of consumption x maximum lead time
 Average Stock Level
=1/2 (Minimum stock level + Maximum stock level)
 Minimum Level
=Minimum Level = Re-ordering level — (Normal rate of
consumption x Normal delivery period)
 Maximum Level
=Maximum Stock level = Reordering level + Reordering
quantity —(Minimum Consumption x Minimum re-ordering period)
 Danger Level
=Danger Level =Average rate of consumption x Emergency supply
time.
MAXIMUMLEVEL
AVERAGELEVEL
RE-ORDERLEVEL
MINIMUM LEVEL
DANGER LEVEL
ZERO LEVEL

7. Q = √2AS/I
where Q stands for quantity per order ;
A stands for annual requirements of an item in t
erms of rupees;
S stands for cost of placement of an order in ru
pees;
I stand for inventory carrying cost per unit per y
ear in rupees.

8. ABC ANALYSIS :
0
200
400
600
800
1000
1200
A B C
VALUE
QUANTI
TY
• In order to exercise effective control over
materials, A.B.C. (Always Better Control)
method is of immense use.
• Group ‘A’ constitutes costly items which m
ay be only 10 to 20% of the total items
but account for about 50% of the total
value of the stores.
• Group ‘B’ consists of items which constitut
e 20 to 30% of the store items and repres
ent about 30% of the total value of stores.
• Group ‘C’ about 70 to 80% of the items is
covered costing about 20% of the total val
ue.

9. INVENTORY TURNOVER RATIO :
= Cost of goods consumed /Average inventory held
during the period

10. JUST IN TIME :
• Just-in-time (JIT) is an inventory strategy companies employ to increase efficie
ncy and decrease waste by receiving goods only as they are needed in the pr
oduction process, thereby reducing inventory costs. This method requires pro
ducers to forecast demand accurately.
ADVAN
TAGES
DISAD
VANTA
GES
 This method reduces costs by
eliminating warehouse
Storage needs.
 The disadvantages of just-in-time inventor
ies involve disruptions in the supply chain.