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Inventory Management Control Reviewer

The document discusses inventory management and control. It aims to ensure companies maintain optimal inventory levels to meet demand while minimizing costs and maximizing profits. Effective inventory management achieves objectives like meeting customer demand, preventing stockouts, minimizing holding costs, and optimizing cash flow. It involves classifying inventory, applying SKU codes and barcodes, monitoring levels, and considering factors that affect management. Demand forecasting, stock audits, and inventory software are important strategies to help minimize waste in the inventory management process.

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422 views10 pages

Inventory Management Control Reviewer

The document discusses inventory management and control. It aims to ensure companies maintain optimal inventory levels to meet demand while minimizing costs and maximizing profits. Effective inventory management achieves objectives like meeting customer demand, preventing stockouts, minimizing holding costs, and optimizing cash flow. It involves classifying inventory, applying SKU codes and barcodes, monitoring levels, and considering factors that affect management. Demand forecasting, stock audits, and inventory software are important strategies to help minimize waste in the inventory management process.

Uploaded by

dhapneshine
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Inventory Management &

Control
MIDTERM REVIEW
Purpose of Inventory management

This is to ensure a company maintains an optimal level of goods or products on hand


to meet customer demand while minimizing costs and maximizing profitability

Role of Inventory management

This is to maintain appropriate stock levels for the business’ needs, minimizing
wasted inventory, funds tied up in stock, and lost income through stocks dropping
too low.

Stocks Inventory

This is a systematic and comprehensive record of all tangible assets, goods, or


products that a business possesses at a specific point of time.
What are the Functions of Inventory

 To “decouple” or separate various parts of the production


process.

 To provide a stock of goods that will provide a


“selection” for the customers.

 To take advantage of quantity discounts.

 To hedge against inflation and upward price changes..


Inventory management is effective when achieving several important business objectives. What
are these objectives? We can say that the inventory management is effective when these objectives
are achieve.

Meeting Customer Demand

Preventing Stockouts

Minimizing Holding

Preventing Stockouts Costs

Reducing Operating Cost

Optimizing Cash Flow


Inventory Classification
Means to group the inventory items based on various parameters.

What are the Classification of Inventory?


 Classification by inventory type
 Classification by contribution of sales

 Classification by frequency of sales


 Classification by value of inventory

Stocks Inventory
Is a systematic and comprehensive record of all tangible assets, goods, or products that
a business possesses at a specific point of time.
Application of SKU Codes and Barcodes for Goods
It is one of the right steps to make it easier for companies to track inventory. It is
useful to ensure all existing stocks are recorded properly.

Monitoring the level of Inventory

It is an important role in the management process. If each company involves this process
periodically, it can be ascertained that the company will avoid depreciation of inventory.

Factors that affect inventory management:


1. Financial Factor 4. Lead Time 7. Vendors & Manufacturers

2. Market Demand 5. Forecast Quality and Quantity

3. Inventory Theft 6. Product Types


Inventory Management and Control
It is crucial for businesses of all sizes and industries.

Demand Forecasting
This helps prevent overstocking and understocking, reducing the risk of waste.

Strategies to Help Minimize Waste in Inventory Management:

Demand Forecasting Regular Stock Audit


Just-In-Time (JIT) Supplier Performance Monitoring
ABC Analysis
Order Quantity Optimization
FIFO and LIFO
Product Life Cycle Management
Inventory Software and Technology
This is one of the critical areas in Inventory Management and Control. This is
essential for modern businesses to streamline operations. This can streamline
processes, track inventory in real-time, and provide data analytics to make informed
decisions.

Levelized Production
This theory of inventory control aims to help optimize labor costs by making
inventory at a steady rate to avoid peaks and valleys.

Ordering Cost

This cost are the costs associated with placing an order for inventory.
Carrying Cost

Inventory Holding Cost/Total Inventory Value*100%

Safety Stock Cost


Average Sales(AS) X nb safety days

Inventory Cost
(Beginning Inventory+Inventory Purchases)-Ending Inventory

Ordering Cost

D XS
Q
Opportunity Cost
=Total Revenue – Economic Profit
= What One Sacrifice
What One Gain

Stock Out Cost

= NDOS X AUSPD X PPU)

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