MATERIAL

CONTROL
Module 2
Materials Control
• The term materials refers to all commodities consumed in the process of
manufacturing.

• Material control is defined as safeguarding company’s property in the

form of materials by proper systems of recording and also to maintain
them at the optimum level considering operating requirements and
financial resources of the business.
Objectives of Material Control
• No understocking: Material control systems ensures that there is no
shortage of materials.
• No overstocking: Material control systems ensures that there is no
excess of materials.
• Minimum Wastage: proper storage conditions helps in reducing the
wastage in materials.
• Economy in Purchasing: materials can be purchased at most favourable
prices.
Techniques of Materials or Inventory Control
• ABC Techniques
• VED Analysis
• EOQ
• Just In Time
ABC Techniques
• Always Better Control Technique is a value based system of material
control. Materials are analysed according to their values so that costly
and more valuable materials are given greater attention and care.
• Materials are classified to their values i.e., High, Medium, Low.
• “A” Items- High Value items
• “B” Items- Medium Value items
• “C” Items- : Low Value Items
VED Analysis
• Vital Essential Desirable Analysis – Materials are classified into three
broad categories, namely V – Vital Materials E- Essential Materials D-
Desirable Materials.
• Vital Materials items in the sense when these are out of stock or when
not readily available, the production activity comes to a complete halt
and drastically affected.
• Essential Materials items without which temporary losses of production.
• Desirable Materials items all other items of materials which are
necessary but do not cause any immediate effect on production.
Economic Order Quantity-EOQ
• EOQ is the size of the order which gives maximum economy in purchasing any
material and ultimately contributes towards maintaining the material at the
optimum level at the minimum cost.
• By setting this quantity, the buyer is saved the task of recalculating how much
he should buy each time he orders.
2𝐴𝐵
• Formula: EOQ =
𝐶𝑆
• A- Annual Consumption
• B- Buying Cost per order
• C- Cost per unit of material
• S Storage and carrying cost %
Just in Time- JIT