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BHOPAL

Submitted to: Submitted By:


Miss. DEVKI Mem DINESH SHARMA
Inventory + Management
-: Inventory :-

A detailed list of all the items in stock.

-: Management :-

The act of managing


something
INVENTORY
MANAGEMENT

Properly maintaining
adequate stocks to
ensure uninterrupted
service
Inventory Management
Involves..
 What and how much stock you have
 When to order fresh supplies
 What and how much has been
ordered, when it was ordered
 Where all supplies are stored
 When and how much fresh stock was
received, and by whom
Why ?
Inventories Management
 To Improve customer service
 Economies of purchasing
 To continuous Supply of material.
 Transportation savings
 Hedge against future
 To avoid both over-stocking and under-
stocking of inventory.
 To maintain independence of supply chain
Inventory Supply Chain
Raw
Materials
Works
in
Process

Finished
Goods
Finished
Goods in
Field
Inventory Costs
 Carrying cost
 cost of holding an item in inventory
 Ordering cost
 cost of replenishing inventory
 Shortage cost
 temporary or permanent loss of sales
when demand cannot be met
Cost Model
Annual
Total Cost
cost ($)
Slope = 0

CcQ
Minimum Carrying Cost =
2
total cost

CoD
Ordering Cost =
Q

Optimal order Order Quantity, Q


Qopt
Methods
Inventory Management
 Determination of Stock levels
 Standard price method
 Average Price Method
 JIT Control System
 Inventory Report
 ABC Analysis
 LIFO
 FIFO
 EOQ
How ?
Manage Inventory
Stock Card

 Simple, heavyweight cards


 Kept for each item in stock

Stock Book or Computer Record

 listing of all items in the laboratory


 Update monthly after physical count
 Use information from stock cards
Stock Card:
 Item Name: __________ Unit: __________
 Manufacturer: ________________________
 Minimum Stock (Re-Order Level): ___________

Date Received Issued Quantity Quantity *Balance Lot # Signature


From to Received Issued
Classifying Inventory
Items
 ABC Classification (Pareto Principle)

 A Items: very tight control, complete and accurate


records, frequent review

 B Items: less tightly controlled, good records, regular


review

 C Items: simplest controls possible, minimal records,


large inventories, periodic review and reorder
ABC Analysis Example
+Class C
+Class B

100 —
Class A
90 —

80 —
Percentage of dollar value

70 —

60 —

50 —

40 —

30 —

20 —

10 —

0—

10 20 30 40 50 60 70 80 90 100
Percentage of items
FIFO Method
It assumes earliest goods purchased
are
the first to be sold
LIFO Method
It assumes latest goods purchased
are
the first to be sold
Problems in
Inventory Management
 When to place an order
 How much to order
 Where to store Stock
 storage and holding cost
 Risk deterioration in quality
 Risk of obsolescence
 Risk of price decline
Key Messages..

 Maintain an adequate inventory at all time


 Don’t let any item run out before re-order.
 Never order more than your storage
space. Never order of expired goods.
 All items in the inventory must be
accounted for and recorded.
 Always inspect new shipment before
accepting.
\..Thanks../