...TOPICS COVERED IN THIS CHAPTER : 13.1.0 Definition Of Inventory : 13.2.0 Various Costs Related To Inventory Management : 13.3.0 Inventory Management - Constrains & Problems : 13.4.0 Economic Order Quantity : 13.5.0 Measuring Efficiency Of Inventory Management : 13.6.0 Inventory Control : DETAILS OF TOPICS COVERED IN THIS CHAPTER ARE AS FOLLOWS : 13.1.0 Definition Of Inventory : The Dictionary meaning of Inventory is 'a list of goods'. In a wider sense, inventory can be defined as an idle resource which has an economic value. It is however, commonly used to indicate various items of stores kept in stock in order to meet future demands. * In any organization, there may be following four types of inventory: (a) Raw materials & parts-- These may include all raw materials, components and assemblies used in the manufacture of a product; (b) Consumables & Spares -- These may include materials required for maintenance and day-to-day operation; (c) Work in progress -- These are items under various stages of production not yet converted as finished goods; (d) Finished Products -- Finished goods not yet sold or put into use. 13.1.1 Need For Inventory : Many of the items we need for our day-to-day maintenance and operation are required to be specially manufactured for the Railways. The time to procure these materials, therefore, is longer due to various reasons and it is not possible to procure these materials when instantaneously required. It is, therefore, necessary...
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...TOPICS COVERED IN THIS CHAPTER : 13.1.0 Definition Of Inventory : 13.2.0 Various Costs Related To Inventory Management : 13.3.0 Inventory Management - Constrains & Problems : 13.4.0 Economic Order Quantity : 13.5.0 Measuring Efficiency Of Inventory Management : 13.6.0 Inventory Control : DETAILS OF TOPICS COVERED IN THIS CHAPTER ARE AS FOLLOWS : 13.1.0 Definition Of Inventory : The Dictionary meaning of Inventory is 'a list of goods'. In a wider sense, inventory can be defined as an idle resource which has an economic value. It is however, commonly used to indicate various items of stores kept in stock in order to meet future demands. * In any organization, there may be following four types of inventory: (a) Raw materials & parts-- These may include all raw materials, components and assemblies used in the manufacture of a product; (b) Consumables & Spares -- These may include materials required for maintenance and day-to-day operation; (c) Work in progress -- These are items under various stages of production not yet converted as finished goods; (d) Finished Products -- Finished goods not yet sold or put into use. 13.1.1 Need For Inventory : Many of the items we need for our day-to-day maintenance and operation are required to be specially manufactured for the Railways. The time to procure these materials, therefore, is longer due to various reasons and it is not possible to procure these materials when instantaneously required. It is, therefore...
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...goods sold. Example: Timber in cases of furniture making. Indirect Materials: Materials that are not directly associated with production and are part of operating expenses. Example: Bottom in case of shirt making. Material control Material control is a systematic control over the purchasing, storing and using of material to minimize the possible cost. Material control may be defined as the level of material maintenance so as to ensure uninterrupted production and minimizing the investment of funds. Objectives of material control Material controls basically aims at efficient purchases, storage and consumption of materials. The following are the major objectives of material control: ➢ To ensure better quantity of material at right quantity at right time for efficient and uninterrupted production of output. ➢ To maintain the cost of materials at the minimum level. ➢ To purchases materials at a reasonable price ➢ To minimize the handling cost and time of storing and using of materials. ➢ To protect materials against loss by fine, theft and leakage etc. ➢ To avoid obsolescence of materials. Purchase Procedure The purchase procedure may how ever vary with individual concerns. But yet purchase control is...
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...The constant "beep, beep, beep" of bar codes being scanned at a check-out lane represents a pillar of modern inventory management systems: stock tracking. In the earliest days of shop keeping, merchants wrote down purchases, or they looked at how many units were gone at the day's end and then did their best to forecast future needs. Experience and intuition were key skills, but it remained an inexact method, even when applied to operations that were quite small by today's standards. After the Industrial Revolution, efficiency and mass production became the main goals of businesses, along with an improved customer experience at the point of sale. A team at Harvard University designed the first modern check-out system in the early 1930s. It used punch cards that corresponded with catalog items. A computer would read the punch cards and pass the information to the storeroom, which would then bring the item up front to the waiting customer. Because of the automated system, the machines could also generate billing records and manage inventory. The system proved to be too expensive to use, but a version of it is in use today in some stores, where merchants place cards with product information on the aisle for customers to select and bring to the checkout line. This usually applies to items that are expensive or large and to controlled items, such as medicines. Merchants knew they needed a better system, and researchers created the forerunner of the modern bar-coding system in the...
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...Abstract This plan details the components necessary to develop a low-cost inventory control system to replace a frustrating manual tracking and reordering process. The hardware and software needed to implement the system is detailed as well as the cost associated with creating it. Furthermore, administrative functions associated with operation and maintenance of the system is provided with high-level descriptions. Critical counts can be adjusted to meet business specific requirements for any product detailed in the database. The system works in a circular process, from purchase tracking to inventory monitoring to re-ordering and back around again. This design allows a simple and efficient method to produce and inventory control system with the flexibility to manage many product types and suppliers. We all interact with inventory control systems on a daily basis. Rather it is at your local grocery stores checkout line or products purchased from your favorite online retailer, inventory control systems are at the center of our supply and demand chain. These systems ensure when we place our orders for products that the in stock, on order and committed quantities are accurate and monitored. It’s very common for large companies to use these types of systems is also becoming more common for small businesses. The following plan presents a low-cost alternative to the manual processes currently used by a small clothing store. The systems capabilities allow frustrating task such as...
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...a coin machine and dollar bill changer is needed in order to take payment and provide the necessary change. All companies have their ups and downs when it comes to financial profit. Harvey Industries takes no exception. Recently, Harvey Industries has noticed a sizable decrease in their profits. The steady decline in profits combined with a three year loss in the past four years has caused financial difficulty for the livelihood of the company. There are several reasons that the company has come into trouble. Financial Distress and Recommendations Inventory seems to be a big problem within Harvey Industries. There are several people involved with the replenishment of inventory. Orders are currently being placed by the stockroom foreman, the purchasing manager, and the manufacturing manager. It would make more sense to have only one person in charge of ordering. Consider the idea that one person notices the inventory is low in one area. That person decides to place and order. Before the order arrives,...
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...are in transformation from manual inventory system to automated inventory system, including small businesses. Automated Inventory systems can reduce costs, retain the existing customers and gain profits. It can replace the time consuming manual process by providing more accurate data. Every business should have a proper inventory system in order to track whether the store is running out of the stock of an important item or there are some items that are obsolete. Nowadays, automated system is used almost by all the retailers, grocery stores and manufacturing companies. A good inventory control system will alert the retailer when it is time to reorder (www.barcodesinc.com). Automated inventory system will keep the competitive advantage of your company and increase the value of your business. This plan will describe all the necessary equipment required for a low-cost automated inventory system for a small clothing store. It will also explain the costs involved in creation of the system and describe the ongoing maintenance that will be required for the smooth running of the system and provide a workflow diagram of how the system will work. The equipments required to install a low-cost automated inventory system in small clothing store consists of a computer- desktop or laptop whichever is more cheaper, system requirements that can handle and store the inventory system, backup/recovery/portable hard disk and archive device, wireless router, inventory software, mobile scanning device...
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...Inventory Control Models Quantitative Analysis Inventory is often discussed in such a manner that it seems unimportant, but this couldn’t be any further from the truth. The manner in which an organization controls its inventory can decide its fate. Is it too hard to imagine a store advertising a large three day sale but did not forecast correctly and was exhausted of the sale items within hours of the start of the sale. Customers may feel duped into traveling to the store under false pretenses. Or, imagine huge quantities of Christmas items left in the warehouse days after Christmas. The loss of profits or requirement to sell off the items to make room on the shelves could devastate a small business. Inventory is defined as any stored resource that is used to satisfy a current or future need (Render, 2012). Running a successful retail or wholesale business is all about allocating funds wisely. Organizations need to buy only what is necessary of any one item in order to keep sales going, and prevent stock-outs. The rest of the funds can be used to increase product range, increase marketing or pay debts. Items that sit on the shelf gathering dust for months are no use to anyone - an accurately kept inventory system allows managers to quickly identify slow moving products, put them on special offer and release the cash for higher turnover goods. Some companies rely on raw materials to produce products. A lack of inventory can cause the company to miss expended production...
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...Business Inventory Control Meghan Farrar, Amanda May, Nancy Dinges, Scott Moore and Bianca Holmes American Public University Introduction “Inventory is one of the most expensive and important assets to many companies, representing as much as 50% of total invested capital. Managers have long recognized that good inventory control is crucial” (Render et al, 2011). Therefore, it is really no surprise that companies place such a high importance on inventory control. An analysis of the planning and forecasting process, as well as the uses of inventory control will certainly verify the significance of inventory control in the business environment. In addition, by utilizing several inventory methods: economic order quantity, production run and quantity discount models, in hypothetical inventory scenarios for McDonald’s, there will be sufficient evidence to support the accuracy and importance of inventory control. Inventory Control: Planning & Forecasting The importance of inventory control and planning cannot be overstated no matter what the size of the business. Inventory control is a process managers must master in order to most effectively and efficiently deliver their company’s products or services to the customer (Render et al, 2011). The two most essential steps in effectively managing inventory are planning and forecasting. Inventory planning encompasses the “what” in terms of specific inventory stock requirements and addresses how the inventory will be...
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...INVENTORY MANAGEMENT AND CONTROL* INVENTORY MANAGEMENT AND CONTROL concerns most managers of agricultural marketing and supply businesses, whether they are retail, wholesale, or service oriented. The value of a manager to an agricultural marketing and supply business depends on his ability to manage inventories effectively. The total cost of maintaining the desired inventory level must be held down to a reasonable figure, but the inventory must also be large enough to permit the company to effectively merchandise the products and services it sells. If the manager doesn't control his inventories to accomplish both of these objectives, the business may not be able to prosper or even to survive against competition. The information in this circular suggests to the manager ways on how best to do four things: Y How to control inventories. Y How to visualize the inventory costs to be included in determining how much inventories are costing the company. Y How to determine the level of inventory that is most profitable. * Y How to determine how much to order and how often to order. Controlling Inventories Purchase systematically. Place orders for materials long enough beforehand so there will not be a shortage between ordering and delivery. Let the inventory become relatively low before reordering but keep enough on hand to meet current needs. There are costs associated with keeping large inventories. Likewise, there are costs if you deplete your stock. Don't hold “dead” lines...
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...Quality Control Theory Jonathan Agee, Steven Bonilla, Joseph Eastman, Chris Ibarola, and Bruce Kleinknight American Public University Abstract Quality. It's one simple word that in today's marketplace means the difference between greatness and bankruptcy. It's what separates the pretenders from the contenders. Because of the large availability of products on today's market, quality has become a major factor in people deciding factors. Gone are the days of old when companies could produce a product of sub-par quality and be profitable because the competitors were out of the market place. With quality being such a huge deciding factor these days with customers, it would be financially ruining if managers produce a product lacking in quality. Just try to fathom if car companies like BMW would be around if they produced poor products. Imagine showing up to a BMW dealership to purchase a "Melbourne Red Metallic" car only to find every red car was a different shade from the other. To prevent these catastrophic business practices, companies have created a control process to compare their new products to a set standard. It's this continued quality that keeps the customer and creates a successful business. Throughout this report, we will explain how companies can ensure their success by controlling the quality of their products. Before we get into the models and examples of quality control, we fist must have a basic background understanding of the concept. Quality is defined...
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...Use of SCM as a Method of Inventory Control January 22, 2012 Business 650: Managerial Finance Dr. Samantha Duhn Introduction Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. Supply chain management is a concept that is applicable to many industries. Supply chain management is also a consideration of all possible events and factors that can affect, change, or disrupt a product. The supply chain starts very early, in planning stages, and extends through the re-use of an obsolete product. In many cases the supply chain includes the collection of goods after consumer use for recycling. Supply change management is a key to successfully managing inventory within the manufacturing industry and works by combining the of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers (Wailgum, 2008). The Process of SCM Supply chain management is a complex process comprised of many simple steps and strategies outlined here. Planning is essential to the SCM process. This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer...
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...and recommending an inventory control model by ordering optimum units to help them solve their current issue. As a result, an Economic Order Quantity (EOQ) and a variable cost was recommended to help them reduce their product stock outs. The shortage of raw material for production always makes the process discontinuous and reduces the productivity. The ABC analysis technique for the inventory control system is first used to identify the most important multiple products and then the economic order quantity (EOQ) of each product is...
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...the inventory control system for XXXXX and describe its purpose, critical aspects and objectives. This report will review its faults and challenges, then describe solutions which will produce measurable results. Purpose of an Inventory Control System The inventory control system is the mechanism within a company that is used for efficient management of the movement and storage of raw material, work in process, finished goods, effective utilization of people and equipment, and the communication of this information within the organization and its customers. The inventory control system provides the vital information needed for managers to make decisions. Critical Aspects and Objectives of an Inventory Control System The main goals of an inventory-control system are distributing product to customers on time and as cost-effectively as possible. With this said, the main objectives of the inventory control system are to avoid back-orders while avoiding excess inventory, provide for the efficient movement of goods, and to maximize profit margins while maintaining sustainable cash flow. Avoiding back-orders: Back-orders are costly. You want to make sure that the company has sufficient stock on hand to deliver to customers when they want the product. A defined replenishment system is critical to maintain inventory at sufficient levels to meet customer demands. Seeing as it costs time and money to promote products and attract customers, it is important to have inventory on hand...
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...Inventory management is a core operations management activity. Good inventory management is important for the successful operation of most businesses and their supply chain. Operations, marketing, and finance have interests in good inventory management. Poor inventory management hampers operations, diminishes customer satisfaction, and increases operating costs (Stevenson, 2009, pg. 549). Inventory is a stock or store of goods. Too many companies have unsatisfactory inventory management, which sometimes is a sign that management does not recognize the importance of inventories. More often than not, though the recognition is there. What is lacking is an understanding of what needs to be done and how to do it (Stevenson, 2009, pg. 549). Harvey Industries current financial and inventory distress includes: no accountability for managing inventory issues, poor inventory record keeping of on-hand and out of stock supplies and inventory that has been used. Recommendations that would help Harvey Industries with better inventory control: First, make sure to set up an inventory control team. Their task should include inventory record maintenance that covers the stock room and assembly area and a regular inventory count. Secondly, use the A-B-C approach. In which classifies inventory items according to some measure of importance, usually annual dollar value, and then allocates control efforts accordingly. Harvey can use three classes of items they used: A (very...
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