INVENTORY MANAGEMENT

Presented by
PATEL KALPESH
 Inventory
• What is Inventory?
• In a literal sense, inventory refers to stocks
• Inventory are all movable items which are
necessary to manufacture a product and to
maintain equipment and machinery in good
working condition
 Inventory
• These stocks represent a large portion of the
business investment and must be well
managed in order to maximize profits.
 Inventory Management
• “Inventory management involves development
and administration of policies, system and
procedures, which will minimize total cost
relative to inventory decision.”

• According to John Barbage:

“Inventory control is scientific process of
determining how much quantity of material to be
stocked within same limits.”
Successful Inventory Management
• Successful inventory management involves
balancing the costs of inventory with the
benefits of inventory.

• direct costs of storage, insurance and taxes, but

also the cost of money tied up in inventory.
Successful Inventory Management
• The basic building blocks for the Inventory
Management system and Inventory Control
activities are:
   Sales Forecasting or Demand Management
   Sales and Operations Planning
   Production Planning
   Material Requirements Planning
   Inventory Reduction
 Method of Inventory Control
1. Visual control enables the manager to
examine the inventory visually to determine
if additional inventory is required.

2. Tickler control enables the manager to

physically count a small portion of the
inventory each day.
Method of Inventory Management
3.Click sheet control enables the manager to
record the item as it is used on a sheet of
paper.

4. Stub control (used by retailers) enables the

manager to retain a portion of the price ticket
when the item is sold. The manager can then
use the stub to record the item that was sold.
 Inventory Classification
Inventory can be classified according to the
following flow:
– Raw material
– Work-in-process (WIP)
– Finished goods
– Distribution
– Maintenance, repair, and operating supplies
(MRO)
 Type of Inventory
1. Anticipate Inventory
2. Safety Inventory
3. Lot Size Inventory
4. Transportation and hedge inventory
 Inventory Cost
• Inventory management costs
– Item costs
– Carrying costs
– Ordering costs
– Stock-out costs
– Capacity-related costs
Objective of the Inventory Management

• To avoid delay in supply

• To reduce capital blockage
• To reduce material cost
• To maintain up to date records
• To remove outdates, expired or damaged
inventories
• To have period inventory check up