Inventory control & management

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1. Inventory Control & Management

2. Introduction Inventory- A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state. Inventory System - A set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be placed.

3. Items carried in inventory can be Raw materials Purchased parts Components Subassemblies Work-in-process Finished goods

4. Reasons for keeping Inventories   To stabilise production To take advantage of price discounts To meet the demand during the replenishment period To prevent loss of orders(sales) To keep pace with changing market conditions

5. Objectives and Benefits Inventory control aims at keeping track of inventories. In other words, inventories of good quality and right quantities should be made available to different departments as and when they needed.

6. COSTS ASSOCIATED WITH INVENTORY   Purchase (or Production) cost Capital cost Ordering cost Inventory carrying costs (holding costs) Shortage cost

7. Inventory Planning and Control For maintaining the right balance between high and low inventory to minimize cost

8. Inventory Control Decisions Decisions: How much to order? When to order?

9. ECONOMIC ORDER QUANTITY

10. TYPES OF INVENTORY MODELS Simple EOQ model EOQ model with stock outs allowed Inventory model under risk

11. Simple EOQ model

12. EOQ model with stock outs allowed

13. Inventory model under risk

14. SELECTIVE CONTROL OF INVENTORY Selective control refers to the variation in method of control from item to item on some selective basis. Many criteria used for this purpose are Based on the cost of product Lead time Usage rate Procurement difficulties, criticality, frequency of usage

15. SELECTIVE CONTROL OF INVENTORY ABC analysis VED Analysis Material requirements planning (MRP)

16. CONCLUSIONS Careful classification of your inventory, and continuing analysis of those classifications, can play a vital role in maintaining cost at the efficient levels you have established as your goals Inventory control is a constant requirement of doing business successfully.

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