Topic

Inventory Control
Group MembersJagdeep pabba
Tarun reddy
Hemanth

Inventory means
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.

Definition of inventory
control
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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Type of Inventory
(1)

Reason for holding the Inventory

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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Objectives of inventory
control
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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Major activities of inventory

control

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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XIDAS, INVENTORY CONTROL

Inventory Decisions
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.
Production
Work-in-progress

Suppliers
customers.
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Raw materials
XIDAS, INVENTORY CONTROL

Finished good
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Suppl
y rate

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Inventory level

XIDAS, INVENTORY CONTROL

Deman
d rate

Steps in Inventory control

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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Maximum stock level

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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Continue.
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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Minimum stock level

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 time2. Rate of consumption of the material
during the lead time.
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Re-ordering level
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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Economic Order Quantity

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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Computation of EOQ
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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ABC Analysis

It is efficient control of stores requires

greater in case of costlier items.

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Continued.
Item

Quality

Quantity order Checking

Costlier

Less

Less costlier

Order may be on Position being viewed

review basis.
in each month

Economical

Larger

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Regular system to see

that there is no
overstocking as well as
that there is no danger
of production being
interrupted for
unwanted material.

Order in large quantity

so that cost can be
avoided

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Perpetual Inventory System

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Factors which help helpful to make

system successful
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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Daily Inventory Balance Record

Product

Day

Month
1
Opening Physical
Inventory

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
TOTALS

2
Deliveries

3
Meter Sales

4
Inventory Should Be

Year
5
Physical Inventory

6
Variation Today

7
Variation This
Month

Balance sheet is were information

is calculated to determine losses
and gains from daily sales. This is a
very important part of fuel
management it will give you
important records of sales (this is
inventory control).

Daily Readings

Product
Month

Day

Pump 1

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Pump 2

Pump 3

Pump 4

Readings Sales Readings Sales Readings Sales Readings Sales

Year
Total
Meter
Sales

Tank 1

Tank 2

Dip Inventroy Water Dip Dip Inventroy Water Dip

cm.
litres
cm.
cm.
litres
cm.

This is were information collected from

meter totals and tank dips are added and
recorded.

Total
Physical
Inventory

Monthly Summary
Product
Product
Product
Storage Capacity
Storage Capacity
Storage Capacity
Total Variation
Total Variation
Total Variation
% Loss
% Loss
% Loss
Sales for Month
Sales for Month
Sales for Month
Month

This is were we record our calculated losses and gains for every
individual month. This sheet is used for the years sales report.
Will give you sales of individual months. Record keeping is a
important method of tracking your inventory.

Inventory Turnover method

It means how many times a companys
inventory is sold and replaced (finished
product)

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Continued ..
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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Thank you

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