CBM 113 LESSON 5 Flashcards
It is a key activity in operations
management.
Inventory management
Inventory Management has an impact on:
Operations
Marketing
Finance
(OMF)
Poor inventory management will:
Prevent the operations
Reduce customer satisfaction
Raise the operating costs
It is a stock of materials needed to support production or meet customer demands.
Inventory
- It is also called the idle resource of an enterprise.
- In accounting term, it is a current asset.
Inventory
What is Usually included in inventories:
Raw materials
Work in progress
Finished commodities
It is planned approach of determining what to
order, when to order, how much to order, and
how much to stock so that costs associated with
buying and storing are optimal without
interrupting production and sales.
Inventory Control
It answer the question
WHEN SHOULD AN
ORDER BE PLACED?
ORDER LEVEL
It answers the question HOW MUCH SHOULD
BE ORDERED?
ORDER QUANTITY
It strikes the balance between the loss due to nonavailability of an item and cost of caring the stock of an
item.
Scientific Inventory System
It is maintaining optimum level of stock of goods required by
the company at minimum cost to the company
Scientific Inventory Control
What are the Benefits of Inventory Control
- IMPROVEMENT IN
COSTUMERS RELATIONSHIP
BECAUSE OF THE TIMELY
DELIVERY OF GOODS AND
SERVICE
2.
SMOOTH AND
UNINTERRUPTED
PRODUCTION AND,
HENCE, NO STOCK
OUT
- ELIMINATES THE
POSSIBILITY OF
DUPLICATE
ORDERING - EFFICIENT
UTILIZATION OF
WORKING CAPITAL.
HELPS IN
MINIMIZING LOSS
DUE TO
DETERIORATION,
OBSOLESCENCE
DAMAGE AND
PILFERAGE - ECONOMY IN
PURCHASING
It is the classifcation of existing invento is based on annual
consumption and the annual value of the items.
ABC ANALYSIS
It carried out by drawing a graph based on the cumulative
number of items and cumulative usage of consumption
cost.
ABC ANALYSIS
There are 3 types of ABC Classifation and these are:
A-Item
B-Item
C-Item
This is an ABC CLASSIFICATION
that has very tight control, the items being of high value. The
control need to be exercised at higher level of
authority
A-Item
An ABC Classification that has Moderate control, the items being of moderate value.
The control need to be exercised at middle level of
authority
B-Item
The items being low value, the control can be
exercised at gross root level of authority by respective
user department managers
C-Item
The classifcation of existing inventory is based on unit
price of the items. They are classified as high price,
medium price and low cost items.
HML ANALYSIS
The classifcation of existing inventory is based on
criticality of the items. They are classifed as vital,
essential and desirable items.
VED ANALYSIS
The classifcation of existing inventory is based
consumption of the items. They are classifed as fast
moving, slow moving and non-moving items.
FSN ANALYSIS
The classifcation of existing inventory is based on the
items.
SDE ANALYSIS
The classifcation of existing inventory is based on the sources of the items. They are classifed as Government
supply ,ordinarily available, local availability and foreign
source of supply items.
GOLF ANALYSIS
The classifcation of existing inventory is based on the
nature of supply of items. They are classified as seasonal
and off-seasonal items.
SOS ANALYSIS
Deals with idle resources like men,
machines, money and materials. These
models are concerned with two decisions:
HOW MUCH TO ORDER and WHEN TO
ORDER so as to minimize the total cost.
Economic order is calculated by balancing
the two costs.
INVENTORY
MODEL
It is a formula used by businesses to determine the ideal
order amount with the aim of reducing the expenses associated with transpoation, warehousing space, stockouts, and overstocks.
The ________ model’s objective is to establish the ideal order
quantity you ought to have.
ECONOMIC ORDER QUANTITY
(EOQ)
Economic order quantity can be
determined by two methods:
What are they?
- Tabulation Method
- Algebraic Method
It is a data presentation which is presented in a clear
and attractive manner that can be easily understood and
analyzed.
TABULATION METHOD
There are 3 types of Presentation in the Tabulation Method what re they?
- TEXTUAL PRESENTATION
- TABULAR PRESENTATION
- DIAGRAM PRESENTATION
The data
presented are
described within
the text using words, sentences,
or paragraphs.
- TEXTUAL PRESENTATION
The data are
presented
systematically
and logically in
the form of chas
and tables.
- TABULAR PRESENTATION
A tool for
scheduling
activities in a
project plan. It
uses diagrams
that refer to the
node of activities.
- DIAGRAM PRESENTATION
This method is used to solve a pair of linear equations
with two variables. Includes substitution, elimination and
graphing.
ALGEBRAIC METHOD
