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BY-

ABHIGYAN SHARMA
URVI MANGAL
INTRODUCTION
 The term inventory means the value or amount of materials
or resource on hand. It includes raw material, work-in-
process, finished goods and stores and spares.
 Inventory Control is the process by which inventory is
measured and regulated according to predetermined
norms such as economic lot size for order or production,
safety stock, minimum level, maximum level, order level
etc.
 Inventory control pertains primarily to the administration
of established policies, systems and procedures in order to
reduce the inventory cost.
OBJECTIVES OF INVENTORY
CONTROL
 To meet unforeseen future demand due to variation in
forecast figures and actual figures.
 To average out demand fluctuations due to seasonal or
cyclic variations.
 To meet the customer requirement timely, effectively,
efficiently, smoothly and satisfactorily.
 To smoothen the production process.
 To facilitate intermittent production of several
products on the same facility.
 To gain economy of production or purchase in lots.
 To reduce loss due to changes in prices of inventory
items.
 To meet the time lag for transportation of goods.
 To meet the technological constraints of production/
process.
 To balance various costs of inventory such as order cost
or set up cost and inventory carrying cost.
 To balance the stock out cost/ opp0rtunity cost due to
loss of sales against the cost of inventory.
 To minimize losses due to deterioration, obsolescence,
damage, pilferage etc.
 To stabilize employment and improve lab our realtions
by inventory of human resources and machine efforts.
FACTORS AFFECTING INVENTORY
CONTROL
 Type of product
 Type of manufacture
 Volume of production
BENEFITS OF INVENTORY CONTROL
 Ensures an adequate supply of materials
 Minimizes inventory costs
 Facilitates purchasing economies
 Eliminates duplication in ordering
 Better utilization of available stocks
 Provides a check against the loss of materials
 Facilitates cost accounting activities
 Enables management in cost comparison
 Locates and disposes inactive and obsolete store items
 Consistent and reliable basis for financial statements
NATUTRE OF INVENTORY
 Dependent demand- Demand for one product is
linked with demand for another product, such as
components, subassemblies etc.
 Independent demand- Demand for a product/ service
occurs independently of demand for any other product
or service, such as finished product, service parts,
lubricants, cutting oil, greases, preservatives etc.
TYPES OF INVENTORY COSTS
 Ordering (purchasing) costs
 Inventory carrying (holding) costs
 Out of stock/ shortage costs
 Other costs
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