SELECTIVE CONTROL

TECHNIQUES
 WHAT IS INVENTORY CONTROL
 Its planning, ordering and scheduling of raw materials

 Right quality of raw materials available at right time

 Systematic control over purchasing, storing and using of material.

 This can be done using selective treatment techniques

DIFFERENT SELECTIVE CONTROL
TECHNIQUES
CLASSIFICATION CRITERION EMPLOYED
ABC Usage Value
HML Unit Price
VED Criticality of Item
SDE Procurement Difficulties
GOLF Source of Procurement
S-OS Seasonality
FSN Issues from Stores
XYZ Inventory Investment
MNG Stock Turnover Rate
 ABC ANALYSIS
 Classifying inventory according to annual value
of consumption of the items
A - very important
B - mod. Important
C - least important
When a large number of items are involved, relatively few items
account for a major part of activity, based on annual value of
consumption of items.
It is based on the principles of ‘vital few and trivial
many
 A-items : 15% of the items are of the highest value and their
inventory accounts for 70% of the total.
 B-items : 20% of the items are of the intermediate value and
their inventory accounts for 20% of the total.
 C-items : 65%(remaining) of the items are lowest value and
their inventory accounts for the relatively small balance,
i.e.10%
 HML ANALYSIS
 The cost per item (per piece) is considered for this analysis.
 High cost items (H)
 Medium Cost items (M)
 and Low Cost item (L)
It helps in bringing controls overconsumption at the departmental level.
Uses and Application
 To assess storage & Security Requirements
 To keep control over consumption at the departmental head level
 To determine the frequency of stock verification checking frequency: more for high priced
items and less for L category.
 To evolve buying policies to control purchases
 FSN ANALYSIS

 The FSN Analysis is based on the rate of issue or rate of usage of spare parts
and the alphabets F S and N stands for Fast Moving, Slow Moving and Non
Moving items.

 The FSN classification system categorizes the items based on how frequently
the parts are issued and how frequently they are used.

 Fast Moving – Items which are frequently issued from inventory which are
more than once for a specific time period
Slow Moving – Items which are less frequently issued which might be once in a
specific time period
Non-Moving – Items which are not issued from the inventory at all in a specific
time period
GOLF ANALYSIS

 G- Government Suppliers
O- Ordinary or Non Government
L – Local Suppliers
F – Foreign Suppliers

 It is similar to SDE analysis and takes nature of suppliers into

consideration.
SOS ANALYSIS

 S- Seasonal
These are available for limited period of time.
E.g.- Mangoes, raw material for cigarette and paper industries.
These items are procured to last for whole year.
 O- Off Seasonal
These items are available throughout the year.
Prices are lower .
 VED ANALYSIS
V- Vital , E- Essential, D- Desirable
 Vital :-
These are the items if not available, Production will become to halt.
 Essential :-
This group includes items whose stock-out cost is very high.
 Desirable : -
This group comprises of items which don't cause any immediate loss of
production or their stock-out involve nominal expenditure and cause minor
disruption for short duration.

This Analysis is required to identify critical items.

 SDE ANALYSIS
 This analysis is based on spares availability of an item –
 S - refers to Scarce Items, especially imported and those which are
very
much in short supply.
 D - are Difficult items which are procurable in market but not easily
available. For example, items which have to come from far off cities
or where there is not much competition in market or where good
quality supplies are difficult to get or to be procured.
 E - refers to Easy items – Items are those which are easily available;
mostly local items.
 MNG ANALYSIS

 MOVING, NON-MOVING and GHOST items.

 analysis is based on Stock-turnover rate.

1.(M) refers to Moving items. Rate of consumption is high

2. (N) refers Non-moving items. Such items are not consumed in last one

year.

3. (G) refers to Ghost items. These are non-existing items for which the

store people keep bin cards showing the nil balance.

 XYZ ANALYSIS
 This is based on value of stocks on hand i.e. inventory investment.
 X- Items with high inventory values.
Y- Items with Moderate inventory Values.
z- Items with Low inventory Values.

 XYZ analysis is used usually in conjunction with ABC or HML analysis.