inventory control methods

ABC analysis, EoQ analysis

1. Inventory control or stock control can be broadly defined as "the activity of checking a shop’s stock."However, a more focused definition takes into account the more science-based, methodical practice of not only verifying a business' inventory but also focusing on the many related facets of inventory management (such as forecasting future demand) "within an organization to meet the demand placed upon that business economically.

2. Inventory management software often plays an important role in the modern inventory control system, providing timely and accurate analytical, optimization, and forecasting techniques for complex inventory management problems. Typical features of this type of software include _ inventory tracking and forecasting tools that use selectable algorithms and review cycles to identify anomalies and other areas of concern inventory optimization purchase and replenishment tools that include automated and manual replenishment components, inventory calculations, and lot size optimization.

3. lead time variability management safety stock calculation and forecasting inventory cost management shelf-life and slow-mover logic multiple location support Mobile/Moving Inventory Support

4. Inventory control systems have advantages and disadvantages, based on what style of system is being run. A purely periodic (physical) inventory control system takes "an actual physical count and valuation of all inventory on hand ... at the close of an accounting period," whereas a perpetual inventory control system takes an initial count of an entire inventory and then closely monitors any additions and deletions as they occur. Various advantages and disadvantages, in comparison, include: Periodic is technically the more accurate as it considers both counted and valued inventory. Periodic is more time-consuming than perpetual.

5. Inventory control is the process of managing inventory in order to meet customer. demand at the lowest possible cost and with a minimum of investment. Unlike many. factors in pharmacy, inventory is controllable. The pharmacy decides how much.

6. Managing inventory for a small business is a balancing act with supply and demand on one side Several different methods of inventory control, including minimum stock levels, just in time and economic order quantity, are used by businesses to gauge the needs of consumers and the company.

7. Inventory control methods vary across companies, commodities. The method that works best for slow- moving items might not work as well for fast-moving items. There is no perfect method to manage inventory. A holy grail or magic formula that results in perfect inventory levels does not exist.

8. The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost,while also providing a mechanism for identifying different categories of stock that will require different management and controls. The ABC analysis suggests that inventories of an organization are not of equal value. Thus, the inventory is grouped into three categories ( A , B , and C ) in order of their estimated importance

9. There are no fixed thresholds for each class, and different proportions can be applied based on objectives and criteria. ABC Analysis is similar to the Pareto principle in that the 'A' items will typically account for a large proportion of the overall value, but a small percentage of the number of items. Examples of ABC class are ' A ' items – 20% of the items accounts for 70% of the annual consumption value of the items ' B ' items – 30% of the items accounts for 25% of the annual consumption value of the items ' C ' items – 50% of the items accounts for 5% of the annual consumption value of the items Another recommended breakdown of ABC classes: "A" approximately 10% of items or 66.6% of value "B" approximately 20% of items or 23.3% of value "C" approximately 70% of items or 10.1% of value

10. The basic work in this always better control analysis is the classification and identification of different types of inventories, for determining the degree of control required for each. In many firms it is found that they have stocks which are used at very different rates. So i t ems are c l a s s i f i e d und er t h ree b r o ad ca t e go ri e s A, B and C, on the basis of usage, bulk, value, size, durability, utility, availability, criticality etc.; and should be controlled with due weightage to differential characteristics