this is the presentation on management of inventory control and inventory control method

1. Topic
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Inventory Control
Dharmender kumar
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2. All the materials , parts, suppliers, expenses and in
process or finished products recorded on the books
by an organization and kept in its stocks,
warehouses or plant for some period of time.
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3. Inventory control is the technique of maintaining
the size of the inventory at some desired level
keeping in view the best economic interest of an
organization.
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4. Type of Inventory Reason for holding the Inventory
(1) Raw materials
To reap the price advantage
available on seasonal raw
materials.
(2) Work in progress To balance the production flow.
(3) Ready made components When the components are bought rather
than made.
(4) Scraps They are disposal of in bulk.
(5) Finished Goods Lying in stock rooms and waiting
dispatches
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5.  Protection against fluctuations in demand;
 Better use of men, machines and material;
 Protection against fluctuations in output;
 Control of stock volume;
 Control of stock distribution.
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6.  Planning the inventories;
 Procurement of inventories;
 Receiving and inspection of inventories;
 Storing and issuing the inventories;
 Recording the receipt and issues of
inventories.
 Physical verification of inventories;
 Follow-up function ;
 Material standardization and substitution.
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7. Executive decide two basic issues while dealing with inventories;
(a) How much of an item to order when the inventory of that item is to be
replenished.
(b) When to replenish the inventory of that item.
By definition, inventory facilitate production or satisfy customer
demands.
Inventory system is a set of policies and controls which monitors and
determines the levels of inventory. Inventory conventionally include raw
materials, work-in-progress, components parts, supplies and finished goods.
Operations is a transformation process in which the inputs are raw materials
and output is the finished goods.
Suppliers Raw materials work in progress Finished good
customers.
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8. Supply
Inventory level Demand
rate rate
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9.  Deciding the maximum- minimum limits of
inventory;
 Determination of Reorder point;
 Determination of reorder quantity;
 Perpetual inventory control;
 ABC analysis;
 Method of control through turn over.
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10.  Quantity of inventory above which should not be
allowed to be kept. This quantity is fixed keeping in
view the disadvantages of overstocking;
Factors to be considered:
 Amount of capital available.
 Godown space available.
 Possibility of loss.
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11.  Cost of maintaining stores;
 Likely fluctuation in prices;
 Seasonal nature of supply of material;
 Restriction imposed by Govt.;
 Possibility of change in fashion and habit.
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12.  This represents the quantity below which stocks
should not be allowed to fall .
 The level is fixed for all items of stores and the
following factors are taken into account:
1.Lead time-
2. Rate of consumption of the material during the
lead time.
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13.  It is the point at which if stock of the material in
store approaches, the store keeper should initiate
the purchase requisition for fresh supply of
material.
 This level is fixed some where between maximum
and minimum level.
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14.  It is also known as standard order quantity ,
optimum quantity or economic lot size.
 By definition economic order quantity that size of
order for which the total cost is minimum.
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15.  The widely used formula is
EOQ =√{2RCp/Ch}
Where ,
R= Annual quantity to be used in units.
Cp=Cost of placing an Order.
Ch= cost of holding one unit for one year.
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16. It is efficient control of stores requires greater in
case of costlier items.
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17. Item Quality Quantity order Checking
A Costlier Less Regular system to see
that there is no
overstocking as well as
that there is no danger
of production being
interrupted for
unwanted material.
B Less costlier Order may be on Position being viewed
review basis. in each month
C Economical Larger Order in large quantity
so that cost can be
avoided
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18. INVENTORY CONTROL 03/29/13 18

19.  Stores ledger, stores control, cards or bin cards are
properly maintained ;
 Quantity balance store shown in the store ledger;
stock control and bin cards are reconciled;
 Exploring the cause of discrepancies if any physical
balances and book balances.
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20. It means how many times a company’s
inventory is sold and replaced (finished
product)
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21. Inventory ratio (Raw material)-
The value of material consumed during a
period
Average value of inventory during that period
High ratio = fast moving stock
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22. Thank you
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