SELECTIVE INVENTORY
CONTROL SYSTEMS
GROUP MEMBERS
Rahul Mehta-13053
Sagar Shah-13094
Vinod Prakash-13080
Yash Seth-13083
INTRODUCTION
The term inventory means the value or amount of
materials or resource on hand. It includes raw
material, work-in-process, finished goods & stores
& 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 &
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/opportunity cost
due to loss of sales against the costs of inventory.
To minimize losses due to deterioration,
obsolescence, damage, pilferage etc.
To stabilize employment and improve lab our
relations 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 & disposes inactive & obsolete store items
Consistent & reliable basis for financial statements
INVENTORY
NATURE 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 for any other product or service, such as
finished product, service parts, lubricants, cutting
oil, greases, preservatives etc.
The dependency is vertical if the demand for one
product is derived from the demand for another
product. E.g. demand for engine block is derived
from demand for cars.
The dependency is horizontal if the demand for
one item is not directly related, but related in
another manner. E.g. demand for C.I. ingots
horizontally depend on automobile product of
company.
Only independent demand items need forecasting
because that of dependent items can be derived
from demand for independent items.