INVENTORY MANAGEMENT

INVENTORY MANAGEMENT

The success of the business concern largely depends on efficient purchasing,storage,consumption and accounting.Uncontrolled inventories are dangerous and at times it is called as grave yard of business.Hence, inventory control system should be designed to ensure the provision of the required quantity of material at the required time to meet the needs of production and sales, while at the same time keeping the investment in them at a minimum.

Objective of Inventory Management

Operative Objectives :- It aims at at avoiding the production bottlenecks by supplying the all types of raw material and avoid the downtime due to short supply of raw material and ensure the timely execeution of sales orders and better services to the customers.

Financial Objective:- It includes effecting economy in purchasing of the materials through EOQ and taking the advantages of favourable market  conditions and maintain the optimum level of inventories.

Cost for inventory 

  1. Acquisition or ordering cost of inventories .
  2. Material cost
  3. Carrying cost or holding cost.
  4. Overstock and under stock costs.

Inventory Control Techniques

  1. Economic Order Quantity.
  2. ABC analysis
  3. Perpetual inventory
  4. Value analysis
  5. Inventory Turnover ratio
  6. Input-Output ratio

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