CBM 113 LESSON 5 Flashcards
It is a key activity in operations
management.
Inventory management
Inventory Management has an impact on:
Operations
Marketing
Finance
(OMF)
Poor inventory management will:
Prevent the operations
Reduce customer satisfaction
Raise the operating costs
It is a stock of materials needed to support production or meet customer demands.
Inventory
- It is also called the idle resource of an enterprise.
- In accounting term, it is a current asset.
Inventory
What is Usually included in inventories:
Raw materials
Work in progress
Finished commodities
It is planned approach of determining what to
order, when to order, how much to order, and
how much to stock so that costs associated with
buying and storing are optimal without
interrupting production and sales.
Inventory Control
It answer the question
WHEN SHOULD AN
ORDER BE PLACED?
ORDER LEVEL
It answers the question HOW MUCH SHOULD
BE ORDERED?
ORDER QUANTITY
It strikes the balance between the loss due to nonavailability of an item and cost of caring the stock of an
item.
Scientific Inventory System
It is maintaining optimum level of stock of goods required by
the company at minimum cost to the company
Scientific Inventory Control
What are the Benefits of Inventory Control
- IMPROVEMENT IN
COSTUMERS RELATIONSHIP
BECAUSE OF THE TIMELY
DELIVERY OF GOODS AND
SERVICE
2.
SMOOTH AND
UNINTERRUPTED
PRODUCTION AND,
HENCE, NO STOCK
OUT
- ELIMINATES THE
POSSIBILITY OF
DUPLICATE
ORDERING - EFFICIENT
UTILIZATION OF
WORKING CAPITAL.
HELPS IN
MINIMIZING LOSS
DUE TO
DETERIORATION,
OBSOLESCENCE
DAMAGE AND
PILFERAGE - ECONOMY IN
PURCHASING
It is the classifcation of existing invento is based on annual
consumption and the annual value of the items.
ABC ANALYSIS
It carried out by drawing a graph based on the cumulative
number of items and cumulative usage of consumption
cost.
ABC ANALYSIS
There are 3 types of ABC Classifation and these are:
A-Item
B-Item
C-Item
This is an ABC CLASSIFICATION
that has very tight control, the items being of high value. The
control need to be exercised at higher level of
authority
A-Item
An ABC Classification that has Moderate control, the items being of moderate value.
The control need to be exercised at middle level of
authority
B-Item
The items being low value, the control can be
exercised at gross root level of authority by respective
user department managers
C-Item
The classifcation of existing inventory is based on unit
price of the items.
HML ANALYSIS
The classifcation of existing inventory is based on
criticality of the items.
VED ANALYSIS
The classifcation of existing inventory is based
consumption of the items.
FSN ANALYSIS
The classifcation of existing inventory is based on the
items.
SDE ANALYSIS
The classifcation of existing inventory is based on the sources of the items.
GOLF ANALYSIS
The classifcation of existing inventory is based on the
nature of supply of items.
SOS ANALYSIS
