PRESENTATION

ON MANAGEMENT CONTROL
SYSTEMS

DONE BY
NISHA KHERA
ROLL NO. 77
INVENTORY CONTROL
INTRODUCTION
The control of inventories is one of the
most complex, yet crucial of all business
activities. It has wide organisational
implications and is the focal point of
many conflicting objectives, both long
term and short term. it is important to
almost every type of business, whether
product or service oriented.
DEFINITION
Inventory is the stock of any item or
resource used in an organisation. An
inventory system is the set of policies and
controls that monitor levels of inventory
and determine what levels should be
maintained, when stock should be
replenished and how large orders should
be.
PURPOSE OF INVENTORY
To maintain independence of operations.
To meet variation in products.
To allow flexibility in production
scheduling.
To provide a safeguard for variation in raw
material delivery time.
To take advantage of economic purchase
order size.
To hedge against price increace.
OBJECTIVES OF INVENTORY
CONTROL
To achieve satisfactory levels of customer
service.
Managers have a number of measures of
performance to judge the effectiveness of
inventory management.
Inventory management has two main
concerns; one is the level of customer
service and the other is cost of ordering
and carrying inventories.
REQUIREMENTS OF EFFECTIVE
INVENTORY MANAGEMENT
A system to keep track of the inventory
on hand and on order.
A reliable forecast of demand that
includes an indication of possible forecast
error.
Knowledge of lead times and lead time
variability.
Reasonable estimates of inventory
holding costs, ordering costs, and shortage
cost.