INVETORY MANAGEMENT

PRESENTED BY:NISHU SHARMA

INTRODUCTION

• Inventory Raw material Work in process Finished goods

• Inventory management

NATURE OF INVENTORY

• Quality

• Speed

• Flexibility

• Cost

PURPOSE / MOTIVE OF HOLDING INVENTORY• The Transaction motive

• The Precaution motive

• The Speculative motive

BENEFITS OF HOLDING INVENTROY

• Avoiding Lost Sales

Without the necessary goods in hand Lose its business and market share

• Gaining Quantity Discounts

Bulk purchase on raw materials Gain quantity discounts

• Reducing Order Cost

By making bulk orders Number of orders will reduce Lessen the cost involved.

• Achieve Efficient Production Runs

Holding an inventory make sure the production line will never ran out of raw materials

• Reducing risk of production shortages

If one single component ran out of stock Entire production line could be halted

Risks and costs of holding inventory

• Capital Costs: blocking of the firm’s financial resources The funds may be arranged from own

resources or from outsides. • Storage and Handling costs the rental of the godown insurance charges, etc. .

• Risk of Price Decline

• Risk of Obsolescence

• Risk Deterioration in Quality

Objectives Of Inventory Management

• To keep inventory at sufficiently high level to perform production and sales activities smoothly.

• To minimize investment in inventory at minimum level to maximize profitability both in adequate & excessive quantities of inventory are undesirable for business

• Availability of material

• Minimize the wastage

• Promotion of manufacturing efficiently

• Better services to customers

• Control production level

• Optimum levels of inventories

Tools and techniques of inventory management

• A-B-C Analysis The materials are divided into three

categories viz, A, B and C

• Inventory Reports Informed with the latest stock position of different items Should contain all information necessary

for managerial action