about inventory management, concepts, applications, importance,objectives

1. Inventory
Management

2. • Inventory is material that
the firm obtains in advance
of need, holds until it is
needed, and then uses,
consumes, incorporates
into a product, sells or
otherwise disposes it of .

3. Types of Inventories
 Raw
Material
Inventories

4. Types of Inventories
Work In
Process
Inventories

5. Types of Inventories
 Spare Part
Inventories

6. Types Of Inventories’
 Finished
Inventories

7. Cycle Stock and safety stock
•

8. Classification Of
Inventories Cost
 Purchase Cost
the cost
which the firm
pays to its
vendor.
Per /unit

9. Classification Of Inventories
Cost
 Ordering Cost
Cost incurred
whenever we order or
reorder the inventory.
Cost involved in
processing the order
e.g administrative cost

10. Classification Of Inventories Cost
 Holding cost
the cost that
accrue due to the
actual holding
of inventory over
a time period.

11. Classification Of Inventory
Cost
 Shortage Cost
This cost occurs
when there is
no inventory

12. Uses Of Inventory
•Time - The time lags present in the
supply chain, from supplier to user at
every stage, requires that you maintain
certain amounts of inventory to use in
this "lead time."

13. Uses Of Inventory
Uncertainty - Inventories are maintained as
buffers to meet uncertainties in demand, supply
and movements of goods.

14. Uses Of Inventory
• Economies of scale - Ideal condition of "one
unit at a time at a place where a user needs it,
when he needs it" principle tends to incur lots of
costs in terms of logistics. So bulk buying,
movement and storing brings in economies of
scale, thus inventory.

15. Objectives Of Inventory
Control
• To ensure smooth flow of stock

16. Objectives Of Inventory
Control
• To provide the required quantity of material

17. Objectives Of Inventory
Control
To control Investment in stock

18. Objectives Of Inventory
Control
Protection against Fluctuating demand

19. Objectives Of Inventory
Control
Protection against Fluctuation in
output

20. Objectives Of Inventory
Control
Minimization Of Risk and Uncertainty

21. Objectives Of Inventory
Control
Risk Of Obsolescence

22. Objectives Of Inventory
Control
Minimization Of material Cost