Inventory management and analysis
INVENTORY MANAGEMENT AND ANALYSIS
Description also available in video format (attached
below), for better experience use your desktop.
Introduction
·
Inventory refers
to the value or amount of material, resources or stock on hand
·
The term inventory also includes
o
Raw material
o
Work in process
o
Finished goods
·
Inventory management & analysis refers to the techniques of maintaining the size of the
inventory at some desired level keeping in view the best economic interest of
an organization
·
Inventory is measured and regulated according
to the
o
Economic lot size
o
Safety stock
o
Order level
Functions,
Types and Reasons for keeping Inventory
·
Functions
o
Protection against output fluctuation
o
Better use of Men, Machines and Material
o
Protect against fluctuation in supply
o
Control of stock volume and distribution
·
Types
o
Raw material inventory
o
Work in process inventory
o
Operating supply inventory
o
Finished goods inventory
·
Reasons for keeping Inventory
o
To stabilize the production
o
To take advantage of price distribution
o
To meet the demand during replenishment
o
To prevent loss of order
o
To keep pace with changing market conditions
Objectives
& Benefits of Inventory Management & Analysis
·
Objectives
o
Adequate supply of product to avoid shortage
in supply
o
To reduce the financial investments in
inventory
o
Efficient purchasing, storing and consumption
o
Maintain timely record of inventories
o
Replenishment
o
Provide reserve stock for variations
o
A scientific base for both long & short
term planning
·
Benefits
o
Improves customer relationship by delivering
goods & services on time
o
No stock out results in smooth production
o
Efficient utilization of Capital
o
Reduce the chances of
§ Deterioration
§ Obsolescence
§ Damage
§ Pilferage
o
Eliminate the possibility of duplicate
ordering
Inventory
Control Techniques
·
ABC Analysis (Always
Better Control)
o
This techniques divides the inventory into 3
categories A, B & C on the basis of their consumption value
o
It is also called the Selective Inventory
Control Method
o
Procedure
§ Make the list of all items
§ Determine the annual volume of usage and cost of each
item
§ Multiply each items annual volume by its rupee value
§ Computes each items % of the total inventory in terms of
annual usage in rupees
§ Select the top 10% of all items which have the highest
rupee % & Categorize them as A
§ Select the next 20% of all items with the next highest
rupee % & designate them as B
§ The next 70% of all items with the lowest rupee % are
items C
·
VED Analysis
o
Vital items
§ Its shortage may cause havoc and stopped the whole
operations of the unit
§ Examples can be a Dialyser in a dialysis centre
o
Essential items
§ If not available, the unit does not stop but the
efficiency of the operations is adversely affected
§ Example can be a medication in a government hospital
o
Desirable items
§ Non availability does not stop the work because they
readily available at a lower cost
§ Example is a bottle of phenyl for mopping
·
FSN Analysis
o
Fast moving (used
on daily basis and required in large quantity, just like Normal Saline in an
IPD)
o
Slow moving (issue
not more than 2 times in a week and hence move slowly from the inventory store,
Just like Betadine solution)
o
Non moving (If
there are no issues of an items in past one or two years, just like surgical
kits in a non surgical unit)
·
SDE Analysis
o
Scarce items (High
in demand but less in supply)
o
Difficult items (High in
demand and normal in supply)
o
Easy items (Lesser
in demand and easily available in the market)
·
SOS Analysis
o
S is for Seasonal
items
o
OS is for Off seasonal
items
o
Generally the seller buy the seasonal items
in lower cost and store the inventory, then he sell them at higher prices
during Off season
Video
Description
·
Don’t forget to do
these things if you get benefitted from this article
o
Visit our Let’s contribute
page https://keedainformation.blogspot.com/p/lets-contribute.html
o
Follow our page
o
Like & comment
on our post
·
Comments