Function of Inventory -

INVENTORY Importance - Tools -

ABC, VED, FSN
CONTROL – UNIT Analysis - EOQ -
IV Reorder point - Safety
Stock - Lead time
Analysis. Store keeping
- Objectives - Functions
- Store
keeper – Duties –
Responsibilities,
Location of store -
Stores Ledger - Bin card.
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DEFINITION OF • Inventory refers to
the stock of goods
INVENTORY and materials that a
business holds for
the ultimate
purpose of resale or
production
• Types of Inventory:
Raw materials,
work-in-progress,
finished goods,
MRO inventory
(Maintainence,
Repair and
Operations
inventory
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 • Facilitating Production:
Maintaining an adequate level
of raw materials to ensure
continuous production
• Demand Fulfillment:
Meeting customer demand by
having finished goods in stock
• Buffering Uncertainties:
Cushioning against
uncertainties in demand,
supply chain delays, or
production issues
• Cost Smoothing: Balancing
the costs associated with
production, storage, and
ordering
FUNCTIONS OF
INVENTORY
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TYPES OF • Just-in-Time :
Minimizing inventory
INVENTORY levels to reduce
carrying costs and
MANAGEMENT waste

SYSTEMS • ABC Analysis:

Categorizing
inventory based on
importance and
managing each
category accordingly
• EOQ : Determining
the optimal order
quantity to minimize
total inventory costs

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IMPORTANCE • Cost Reduction: Minimizing
carrying costs, storage
OF INVENTORY expenses, and wastage

MANAGEMENT • Customer Satisfaction:

Ensuring product availability
and timely delivery
• Supply Chain Resilience:
Managing uncertainties and
disruptions effectively
• Profitability: Balancing the
costs of holding inventory
with revenue generation

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 • Stockouts: Risks of
not meeting customer
demand
• Excess Inventory:
Tying up capital and
storage space
• Forecasting Errors:
Difficulty in predicting
future demand
accurately

CHALLENGES IN • Technological
Integration: Adopting

INVENTORY advanced systems for

real-time tracking and
management
MANAGEMENT
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 • Regular Audits:
Conducting periodic
inventory checks
• Supplier Collaboration:
Building strong relationships
with suppliers for timely
deliveries
• Data Analytics: Utilizing
technology for accurate
demand forecasting

BEST • Continuous
Improvement: Regularly

PRACTICES IN reviewing and optimizing

inventory processes

INVENTORY
MANAGEMENT
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 • : ABC Analysis categorizes
inventory into three groups
based on their significance
• A Category: High-value
items contributing
significantly to overall
inventory cost
• B Category: Moderate-
value items with moderate
importance
• C Category: Low-value
items with relatively less
significance

ABC ANALYSIS
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 • VED Analysis classifies
items based on their
criticality for production and
the impact of their non-
availability
• V Category : Vital/ Critical
items, non-availability could
lead to a halt in production
• E Category : Essential
items, their absence can be
managed for a short
duration
• D Category : Desirable
items, non-availability has
minimal impact

VED ANALYSIS
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FSN ANALYSIS • FSN Analysis
categorizes
inventory based on
their consumption
rate
• F Category : Fast-
moving items with a
high consumption
rate
• S Category : Slow-
moving items with a
moderate
consumption rate
• N Category : Non-
moving items with a
low or negligible
consumption rate
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 • EOQ is the optimal
order quantity that

EOQ minimizes total

inventory holding and
ordering costs
• Benefits: Minimizes
costs associated with
ordering and holding
inventory
• Formula:

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 • Reorder Point is the inventory level at
which a new order should be placed

REORDER POINT to avoid stockouts

• Importance: Prevents stockouts and
ensures continuous production
• Formula:

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S AFETY STOCK
• Safety stock is the extra quantity of
inventory that is held to mitigate the
risk of stockouts due to variations in
demand and supply
• Purpose: Cushion against unexpected
demand spikes or supply chain
disruptions
• Considerations: Balancing the cost of
holding safety stock with the risk of
stockouts

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 • Ensuring Continuity
with Safety Stock

IMPORTANCE OF • Mitigating
Uncertainties:
S AFETY STOCK Handling fluctuations in
demand and supply
• Customer
Satisfaction: Meeting
customer demands
consistently
• Supply Chain
Resilience: Buffering
against delays in lead
time
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 • Lead time is the time it
takes for an order to be
fulfilled from the moment it
LEAD TIME is placed to the moment it
is received

ANALYSIS • Components: Ordering

time, processing time,
shipping time
• Calculation: Lead Time =
Sum of time components
• Factors influencing Lead
Time: Supplier reliability,
transportation, order
processing efficiency

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 • Order Planning:
Factoring lead time into
order quantity
IMPORTANCE OF calculations

LEAD TIME • Inventory

Management: Aligning
ANALYSIS safety stock levels with
lead time variability
• Supplier
Collaboration:
Enhancing
communication and
coordination with
suppliers

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 • Optimal Safety
Stock: Considering
INTEGRATING lead time variability in
safety stock
S AFETY STOCK calculations

AND LEAD TIME • Reducing Stockouts:

Ensuring safety stock
is sufficient to cover
lead time fluctuations
• Cost-Efficiency:
Balancing the cost of
holding safety stock
with lead time
improvements
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 • Maintaining Adequate
Stock: Ensuring that the
right quantity of
materials is always
available
• Cost Control:
Minimizing carrying costs
and preventing
overstocking
• Efficient Space
Utilization: Optimizing
storage space for better
organization

OBJECTIVES OF • Timely Accessibility:

Ensuring quick and easy

STOREKEEPING retrieval of materials

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 • Receipt of Goods:
Accepting and verifying
incoming materials
• Storage: Properly
organizing and storing
materials
• Issuing Goods: Facilitating
the distribution of materials
as needed
• Record Keeping:
Maintaining accurate
inventory records
• Security: Implementing
measures to safeguard

FUNCTIONS OF stored items

STOREKEEPING
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 • The storekeeper is a
pivotal role in managing
the day-to-day
STOREKEEPER operations of the storage
facility
• Gatekeeper: Controls
the entry and exit of
materials
• Record Keeper:
Maintains accurate
inventory records
• Coordinator:
Collaborates with
procurement, production,
and other departments
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DUTIES OF A
STOREKEEPER

• Material Inspection: Ensuring

received goods meet quality
standards
• Stock Monitoring: Regularly
checking inventory levels
• Order Processing: Facilitating
the timely issuing of materials
• Documentation: Maintaining
detailed records of transactions
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 • Safety and
Compliance: Ensuring
adherence to safety
protocols and legal
requirements
RESPONSIBILITIES • Supplier Interaction:
Coordinating with
OF A suppliers for deliveries
and discrepancies
STOREKEEPER • Reporting: Providing
regular reports on
inventory status and
activities
• Space Optimization:
Efficiently organizing
storage space for
maximum utility
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IMPORTANCE OF • Operational
Efficiency:
EFFECTIVE Streamlining
material flow for
STOREKEEPING smooth operations
• Cost Reduction:
Minimizing holding
costs and avoiding
stockouts
• Customer
Satisfaction:
Ensuring timely
availability of
materials for
production

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LOCATION OF • The physical placement of a
store within a facility or
STORE organization
• Considerations: Proximity
to production units, ease of
accessibility, and space
utilization
• Impact: Efficient location
enhances material flow and
reduces handling time

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 • Proximity to
Production:

FACTORS Minimizing
transportation time
INFLUENCING • Accessibility: Easy
access for loading and
STORE LOCATION unloading
• Safety: Considerations
for fire safety and
other hazards
• Future Expansion:
Planning for scalability

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STORES • Stores Ledger is a systematic
record-keeping document that
LEDGER tracks the inflow and outflow
of materials from the store
• Purpose: Maintaining a
detailed account of stock
movements
• Components: Date,
particulars, receipt details,
issue details, balance, etc
• Accuracy: Ensuring real-time
updates for precise inventory
management

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 • Strategic Record-Keeping
• Financial Control:
Monitoring costs associated
with materials
• Audit Compliance:
Facilitating internal and
external audits
• Decision Making: Providing
data for informed decision-
making
IMPORTANCE OF • Performance Evaluation:

STORES LEDGER Assessing the efficiency of

store operations

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 • Real-time Inventory Tracking
• A Bin Card is a document used to
track the real-time balance of
materials in a storage location
• Purpose: Recording additions, issues,
and balances for a specific item
• Location-Specific: Tied to a specific
storage bin or location
• Visibility: Providing quick and easy
visibility into stock levels

BIN CARD 28
 • Structured
Documentation
• Displaying a sample
format of a bin card
with columns for date,
particulars, receipt,
issue, balance, etc
• Emphasizing the
importance of
maintaining a neat and
organized bin card

FORMAT OF A
BIN CARD
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 • Complementary Roles:
Stores Ledger for
overall record-keeping,
Bin Card for detailed
location-specific
tracking
• Accuracy: Ensuring
consistency between
INTEGRATION Stores Ledger and Bin
Card for precise
OF STORES inventory control

LEDGER AND
BIN CARD
11/04/2025 S a m p l e Fo o t e r Te x t 30