Unit-3

Q.1 Machine allowance?

Allowance:Machining allowance or finishing allowance is the
extra material addedto the certain parts of the casting to enable
their machining or finishing to the required size, accuracyand
surface finish. The amount of allowance depends upon the casting
method used, size and shape ofthe casting, type of material,
machining process to be used, degree of accuracy and surface
finishrequired./Machining allowance refers to the thickness of
the metal layer cut from the machined surface during machining.
Machining allowance can be divided into process
machining allowance and total machining
allowance./Q/Inventory control model- Inventory control is the
practice of maintaining enough inventory and assets to keep your
business running smoothly. Good inventory control means keeping
the “just right” balance of inventory./ The different inventory
control models- Three of the most popular inventory control
models are Economic Order Quantity (EOQ), Inventory
Production Quantity, and ABC Analysis.
Q.2 Step in material planning and
control?
Inventory control is the practice of maintaining enough inventory and
assets to keep your business running smoothly. Good inventory control
means keeping the “just right” balance of inventory

the three most common inventory control

models
Three of the most popular inventory control models are Economic Order
Quantity (EOQ), Inventory Production Quantity, and ABC Analysis.

1. Economic Order Quantity (EOQ)

The Economic Order Quantity inventory management method is
one of the oldest and most popular. EOQ lets you know the
number of inventory units you should order to reduce costs
based on your company holding costs, ordering costs, and rate
of demand.
Here’s how to calculate your EOQ:

Take the square root of (2SD) / Production Cost

S is your setup (order) costs
D is your demand rate (units)
But the EOQ makes some big assumptions that won’t work for
every company. It assumes your rate of demand, ordering costs,
and unit price of inventory is constant. So if you tend to have
periods of time where the demand for your products is a lot
lower or higher than other periods, the EOQ number will be
meaningless.
2. Inventory Production Quantity
Also known as Economic Production Quantity, or EPQ, this
inventory control model tells you the number of products your
business should order in a single batch, in hopes of reducing
holding costs and setup costs. It assumes that each order is
delivered by your supplier in parts to your business, rather than
in one full product.
This model is an extension of the EOQ model. The difference
between the two models is the EOQ model assumes suppliers
are delivering inventory in full to your customer or business.
Here’s how to calculate your Inventory Production Quantity:

Take the square root of (2SD) / Production Cost (1 – x)

S is your setup (order) costs
D is your demand rate (units)
X is your Demand Rate / Production Rate
This model could be a good fit for your business if:
 • Your business tends to order inventory from suppliers in
parts rather than one full order, such as for
an automotive company.
• Demand for products is consistent over periods of time.

Also known as Economic Production Quantity, or EPQ, this

inventory control model tells you the number of products your
business should order in a single batch, in hopes of reducing
holding costs and setup costs. It assumes that each order is
delivered by your supplier in parts to your business, rather than
in one full product.
This model is an extension of the EOQ model. The difference
between the two models is the EOQ model assumes suppliers
are delivering inventory in full to your customer or business.
Here’s how to calculate your Inventory Production Quantity:

Take the square root of (2SD) / Production Cost (1 – x)

S is your setup (order) costs
D is your demand rate (units)
X is your Demand Rate / Production Rate
This model could be a good fit for your business if:
• Your business tends to order inventory from suppliers in parts
rather than one full order, such as for an automotive company.
• Demand for products is consistent over periods of time.
 3. ABC Analysis
The more money specific inventory brings you, the more
important it is to you. ABC analysis categorizes your inventory
based on levels of importance. By knowing which inventory is
the most important, you know where to focus your attention. To
be most effective, ABC Analysis is frequently used with other
inventory management strategies, such as the Just in
Time method.
Inventory is categorized into either group A, B or C. So how do
you know which category to put inventory under? It’s based on
the 80/20 rule, also known as the Pareto Principle.