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So you do not need to waste the time on rewritings. Chaitali Suvagiya. Seema Bangale. Rajina Raj. Joel George. Rohit jain R RJ. Rana Rushi. Hamna Malik.

Guna Sekaran. Jhansi Rani. Soundarya Sharma. Show More. Views Total views. Actions Shares. No notes for slide. Inventory management 1. Definition of Inventory 1. Inventories means the stock of the product of a company and components thereof that makes up the product.

It includes the raw materials, work in progress and finished goods. It is the physical stock of items a business or production organization kept in hand for the efficient running of business or its production. Inventories are :- 1. Items in stock. Usable but idle resources. Inventory control Process of maintaining optimum needed quantity of inventories for the smooth operation of organization. Classification of inventories Inventory Indirect inventory In process inventory Raw material inventory 4.

Objectives of inventory control The basic managerial objectives are 2 fold:- 1. To provide right quantity and quality goods at right time at proper value. Objectives of inventory control Operating objectives Financial objectives 6.

Operating objectives 1. Availability of Materials: All type of material available at all time so that production may not be held up for want of supply of materials. Minimizing the wastage : permit only uncontrollable wastage. Avoid wastage by leakage theft, embezzlement, spoilage rust, dust , dirt 7. Promotion of manufacturing efficiency: When right type of raw material is available at the right time. Better service to the customers: Maintain proper production flow to produce sufficient finished goods to meet the demand of of the customers 8.

Control of production level: To increase or decrease the production as per the demand as well as to maintain proper buffer stock to meet any eventuality in difficult times. Optimal level of inventories: It is done in view as per the operational requirements. Financial objectives 1. Economy in purchasing: management makes every attempt to purchase the raw materials in bulk quantity and to take advantage of favorable market condition.

Optimum investment and efficient use of capital: The finance management should set up maximum and minimum levels of stocks to avoid deficiency or surplus of stock position. Reasonable price: Management should ensure supply of raw materials at a reasonable low price without sacrificing the quality of it thereby helping the cost of production and quality of finished goods.

Advantages of inventory 1. Delivery in time: as inventory stored aids smooth production, the manufacturing company can earn reputation as a reliable supply. Possibility of discount on bulk purchase 3.

Efficiently handle unforeseen circumstances: harthal, bandh or other transportation difficulties do not hinder production. No idling of workers and machineries. Disadvantages of inventory 1. Working capital tied up: cant utilize the amount for other purposes nor it yield any interest. More space required: more inventories more is the space needed and space accounts for rent. Increase insurance charges: Increased cost of handling and manufacturing.

Increased over head expenses: Security personnel required to guard inventory. Chances of damage: Pilferage, replacement, etc more. Inventory carrying cost Cost of blocking material as inventory. This includes:- 1. Cost of interest for the value of items stored as inventory.

Salaries of personnel managing various position including security personnel. Rent for the space occupied by the inventories. The potential scope of loss , pilferage, obsolescence, etc. Cost involved in the insurance of inventories. Stationeries and consumables used by the store people. Under stocking or shortages. It is the cost of not having an item when it is needed, thus affecting the sales of the company. This may lead to 2 situations:- 1.

Back logging 2. Cancellation of orders. Backlogging: work is delayed beyond its schedule and eats away the schedule time of next order thereby delaying the next order.

Cancellation of order: When buyer is not in a position to wait. Both the above results in: 1. Emergency replenishment: In an urgent situation if you want good quality we may have to spent extra amount eg. Show related SlideShares at end. WordPress Shortcode. Share Email. Top clipped slide. Education , Technology , Business. Download Now Download Download to read offline. Mayank Baheti Follow. Warehouse Operations and Inventory Management. Inventory system. Service Marketing.

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Related Posts. Hello Sumit, Please write more abount Inventory Managerment challenges and its solutions. Sresth Verma. Show More. Views Total views. Actions Shares. No notes for slide. Inventory management 1. What is inventory? A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.

Types of Inventories Raw materials Purchased parts and supplies Finished Goods Work-in-process partially completed products Items being transported Tools and equipment 5. Nature of Inventories Raw Materials — Basic inputs that are converted into finished product through the manufacturing process Work-in-progress — Semi-manufactured products need some more works before they become finished goods for sale Finished Goods — Completely manufactured products ready for sale Supplies — Office and plant materials not directly enter production but are necessary for production process and do not involve significant investment.

Inventory and Quality Management Customers usually perceive quality service as availability of goods when they want them Inventory must be sufficient to provide highquality customer service 9. Basic EOQ model Production quantity model Assumptions of Basic EOQ Model Demand is known, constant, and independent Lead time is known and constant Order quantity received is instantaneous and complete No shortage is allowed EOQ Cost Model cont.

Production Quantity Model cont. Quantity Discount Model cont. V Vital is the inventory where neither Substitute nor Variation Gap is allowed. E Essential is the inventory which allows either of the one to be changed D Desirable is the one which can have variation in both of the parameters Blackstone, Jr.