INVENTORY CONTROL IN ENGLISH

                                                    

                                   INVENTORY CONTROL IN ENGLISH

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INVENTORY CONTROL

—  "Inventory is defined as the blocked working capital of an organization or institution. It is also known as the stock to ensure uninterrupted supply and work as a cushion between estimated and actual demand of materials."

• Inventory is anything that is acquired/purchased and held prior to use. It means all the material/supplies recorded on registers by an organization and is kept in the stock for some time.

• Inventory control is defined as stocking adequate number of material so that they are available whenever required. Inventory control is concerned with minimizing the total cost of inventory management system and keeping a track of inventory.

• Inventory management system is defined as the process of efficiently managing the flow of materials, effectively using the equipment and availability of information of the whole process for administrators.

OBJECTIVES OF INVENTORY MANAGEMENT

1.    To have optimum level of inventory.

2.    To supply required material in time.

3.    To avoid shortage of stock.

4.    To meet unforeseen future demand.

5.    To minimize the inventory cost.

6.    To provide maximum client’s service by meeting their demand timely.

7.    To minimize the losses due to deterioration or damage of stock.

8.    To make better utilization of available material.

9.    To locate and dispose inactive and obsolete store items.

 

 

SETTING UP OF STOCK LEVELS

—  main stock levels are –

—  Minimum level –

—  Minimum level is the minimum stock to be maintained for smooth functioning of the institution

—  Minimum level = reorder level – average usage per period × average time to obtain delivery

—  Maximum level –

—  Maximum level is the level of stock beyond which the stock is not maintained.

—  Maximum level = reorder level – expected minimum consumption × reorder quantity

—  Average stock level -

—  Average stock level is average of minimum and maximum level

—  Average stock level = (Maximum level + Minimum level) / 2

—  Reserve stock  -

—  Reserve stock is the excess usage requirement during normal lead time

—  Lead time

—  It is the time spent between making the decision of stock replenishment and actual availability of goods in the store

—  Safety stock  -

—  It is the stock for usage at normal rate during the extension of lead time

—  Average inventory

—  The average inventory is the sum  of safety stock and half of the reorder quantity