Presentation on theme: " Inventory includes: -stock of raw materials -stock of work in progress -stock of finished goods -stock of spares."— Presentation transcript:
Inventory includes: -stock of raw materials -stock of work in progress -stock of finished goods -stock of spares
REORDERING LEVEL MINIMUM/SAFETY LEVEL MAXIMUM LEVEL DANGER LEVEL AVERAGE STOCK LEVEL
Firm should go for fresh purchase of requisition of material REORDERING LEVEL Maximum Consumption X Maximum Reorder Period
Minimum amount of materials in hand to facilitate the flow of production process. MINIMUM LEVEL Reorder level-(Normal level consumption X Normal Reorder period)
Firms holds maximum quantity of materials as stock during the process. MAXIMUM LEVEL Reorder level+ Reorder Qty. - (Minimum Consumption X Minimum Reorder Period)
At this level, the firm should not further issue any materials to the various functional departments. DANGER LEVEL Average Consumption X Maximum Reorder Period Average Consumption = (Min. Consumption level+ Max. Consumption level)/2
AVERAGE STOCK LEVEL Minimum Stock level + ½ of the reorder qty.
EOQ is the level at which both Ordering & Carrying costs are minimum. Ordering costs per order decreases with an increase in no. of units in an order. Carrying costs increases with an increase in no. of units in an order.
Record prepared by the storekeeper at the moment of Issuing and Receiving of materials. Types 1. Two Bin Card System 2. Three Bin Card System
Two Bin Card System One bin card should be maintained for reorder level & minimum level another for maximum stock level. Three Bin Card System Incorporates the Lead time stock level in addition to Maximum, Reorder and Minimum Level of the stock
Prepared by Costing Department of the firm. It records the issues and receipts of materials at par with the Bin Card system & also the value of materials.
ABC Analysis VED Analysis
A- Always B- Better C- Control A- High control for High value goods B- Moderate control for Lesser value goods C- Little control for Least value goods
V- Vital E- Essential D- Desirable - The spare parts are classified as above in accordance to the criticality of production