INVENTORY

MANAGEMENT
UNDER GUIDANCE
of
PROFESSOR VIJU
NAVARE

GROUP MEMBERS
JAYESH PARAB

2227

PRATHAMESH NAWALE

2223

PRIYANKA KAMBLE

2211

MINAL KUMBHAR

2217

PRANAY PALKAR

2226

INTRODUCTION
THE TERM INVENTORY REFERS TO THE
GOODS & MATERIAL USE BY THE FIRM FOR
PRODUCTION & SALES.
IT ALSO INCLUDE ITEMS WHICH ARE USED
AS SUPPORTIVE MATERIAL TO FACILITATE
THE PRODUCTION.
THERE ARE THREE TYPES OF INVENTORY
1. RAW MATERIAL
2. WORK IN PROGRESS
3. FINISHED GOODS

 INVENTORY CONSTITUTES ONE OF THE

IMPORTANT ITEM OF CURRENT ASSETS.
WHICH HELPS FOR SMOOTH OPERATION
OF PRODUCTION AND SALES PROCESS OF
FIRM.

OBJECTIVES
THE MAIN OBJECTIVE OF INVENTORY
MANAGEMENT IS TO MAINTAIN INVENTORY AT
APPROPRIATE LEVEL.
TO AVOID EXCESSIVE OR SHORTAGE OF
INVENTORY BECAUSE THEY ARE UNDESIRABLE
FOR BUSINESS.
TO ENSURE THAT THE SUPPLY OF RAW MATERIAL
&FINISHED GOODS WILL REMAIN CONTINUOUS
SO THAT PRODUCTION PROCESS IS HALTED &
DEMANDS OF CUSTOMERS ARE DULY MEET.
TO MINIMIZE CARRYING COST OF INVENTORY.

 TO KEEP INVESTMENT IN INVENTORY AT

OPTIMUM LEVEL.
TO REDUCE THE LOSSES OF THEFT,
OBSOLESCENCE, WASTAGE ETC.
TO MAKE THE ARRANGEMENT OF SLOW
MOVING ITEMS.
TO MINIMIZE INVENTORY ORDERING COST.

SCOPE
THE SCOPE OF INVENTORY REGARDLESS OF
WHICH TYPE OF INVENTORY SYSTEM A
COMPANY USES.
SCOPE OF INVENTORY MAY CHANGE BASED
ON THE STRATEGIC TARGETS OF THE
BUSINESS.
SCOPE MAY REFER TO DIFFERENT ASPECTS
OF HOW INVENTORY COUNTS ARE
CONDUCTED OR TO THE WAY INVENTORY
INFORMATION IS USED.
A MANUFACTURER OF DURABLE GOODS MAY
USE INVENTORY INFORMATION TO CONTROL

TYPES OF INVENTORY SYSTEM

PERIODIC
PERIODIC INVENTORY DESCRIBE THE TWO
GENERAL TYPES OF INVENTORY COUNTING
PRACTICES.
A MANUFACTURER MAY USE A PERIODIC
INVENTORY.
PERPETUAL
A RETAIL BUSINESS, ON THE OTHER HAND, MAY
HAVE SCANNER TIED INTO A COMPUTER.
AS STOCK ARRIVES, IT IS SCANNED INTO THE
SYSTEM AND PLACED FOR SALE. WHEN
PURCHASE IS MADE STOCK IS SCANNED AT THE
CASH REGISTER AND THE SYSTEM UPDATES. SO

BENEFITS OF INVENTORY
INVENTORY MANAGEMENT IS PRIMARILY ABOUT
SPECIFYING THE SHAPE & PERCENTAGE IF
STOCKED GOODS.
INVENTORY MANAGEMENT LEADS TO OPTIMAL
LEVELS.
MANAGEMENT OF INVENTORIES , WITH THE
PRIMARY OBJECTIVES OF
DETERMINING/CONTROLLING STOCKS LEVEL.
CASH FLOW OF COMPANY CAN ALSO IMPROVE
WITH THE HELP OF INVENTORY MANAGEMENT.

IMPORTANT TECHNIQUES OF
INVENTORY CONTROL SYSTEM
SETTING UP VARIOUS STOCK LEVELS:
TO AVOID OVER-STOCKING &UNDER STOCKING OF
MATERIAL, THE MANAGEMENT HAS TO DECIDE
ABOUT

MAXIMUM LEVEL
MINIMUM LEVEL
RE-ORDER LEVEL
DANGER LEVEL
AVERAGE LEVEL

OF MATERIAL TO BE KEPT IN THE STORE

 PREPARATION OF INVENTORY BUDGETS:

ORGANIZATIONS HAVING HUGE MATERIAL REQUIREMENT

NORMALLY PREPARE BUDGETS.

THE PURCHASE BUDGETS SHOULD BE PREPARED WELL IN

ADVANCE.
THE BUDGETS OF PRODUCTION & CONSUMABLE MATERIAL &

FOR CAPITAL & MAINTENANCE MATERIAL SHOULD BE

SEPARATELY PREPARED.

SALES BUDGET GENERALLY PROVIDE THE BASIS FOR

PREPARATION OF PRODUCTION PLANS. THEREFORE, THE FIRST
STEP IN THE PREPARATION BUDGETS IS THE ESTABLISHMENT
OF SALES BUDGETS.

 MAINTAINING PERPETUAL INVENTORY

SYSTEM:
THIS IS ANOTHER TO EXERCISE CONTROL
OVER INVENTORY.

THE BASIC OBJECTIVES OF THIS SYSTEM IS

TO MAKE AVAILABLE DETAILS ABOUT THE
QUANTITY AND VALUE OF STOCK OF EACH
ITEM AT ALL TIMES.

THUS, THIS SYSTEM PROVIDES A RIGID

CONTROL OVER STOCK OF MATERIAL AS
PHYSICAL STOCK CAN BE REGULARLY
VERIFIED WITH STOCK RECORD KEPT IN THE
STORE & THE COST OFFICE.

 ESTABLISHING PROPER PURHASE PROCDRES:

A PROPER PURCHASE PROCEDURE HAS TO BE

ESTABLISHED & ADOPTED TO ENSURE NECESSARY
INVENTORY CONTROL. THE FOLLOWING STEPS ARE
INVOLVED.

PURCHASE REQUISITION
INVITING QUOTATION
SCHEDULE OF QUOTATION
APPROVING THE SUPPLIER
PURCHASE ORDER

 INVENTORY TURNOVER RATIO

THESE ARE CALCULATED TO MINIMIZE THE

INVENTORY BY USE OF FOLLOWING
FORMULA
ITR = COST OF GOODS CONSUMED
SOLD DURING THE PERIOD

THE RATIO INDICATES HOW QUICK THE

INVENTORY IS USE FOR PRODUCTION.

HIGHER THE RATIO, SHORTER WILL BE THE

DURATION OF INVENTORY AT THE FACTORY.

 GROUP B CONSIST OF ITEMS WHICH

CONSTITUTES 20-30% OF THE STORE ITEMS &
REPRESENT ABOUT 30% OF THE TOTAL VALUE OF
STORES.
THIS METHOD IS ALSO KNOWN AS STOCK
CONTROL.
IF THIS METHOD IS APPLIED WITH CARE, IT
ENSURE CONSIDERABLE REDUCTION IN THE
STORAGE EXPENSES & IT IS GREATLY HELPFUL IN
PRESERVING COSTLY ITEMS.

INVENTORY ANALYSIS
BELOW ARE THE TYPES OF INVENTORY ANALYSIS,
WHICH ARE CARRIED OUT FOR CLASSIFYING
MATERIALS SO THAT MATERIALS AND PROCESSES
CAN BE TREATED DIFFERENTLY BASED ON THE
CLASSES OF MATERIALS.
ABC ANALYSIS: ABC ANALYSIS CLASSIFIED THE
MATERIALS BASED ON THEIR CONSUMPTION
DURING A PARTICULAR TIME PERIOD.
XYZ ANALYSIS: XYZ ANALYSIS IS CALCULATED
BY DIVIDING AN ITEMS CURRENT STOCK VALUE
BY THE TOTAL STOCK VALUE OF THE STORES.

 SOS ANALYSIS : SEASONAL OFF SEASONAL

REPORT HELPS YOU TO VIEWS SEASONAL
REQUIRED ITEMS.
FSN ANALYSIS: CLASSIFICATION OF
MATERIAL BASED ON MOVEMENT I.E FAST
MOVING AND NON MOVING.
VED ANALYSIS : BY USING THIS ANALYSIS FOR
MATERIAL WE CLASSIFY MATERIAL ACCORDING
TO THEIR CRITICALITY TO THE PRODUCTION.
GOLF ANALYSIS : GOVERNMENT, ORDINARY,
LOCAL AND FOREIGN REPORT HELPS YOU TO
DO MATERIAL ANALYSIS BASED ON LOCATION
AND TYPE OF ORGANIZATION.

 HML ANALYSIS : THIS ANALYSIS IS DONE FOR

CLASSIFYING THE MATERIAL BASED ON THEIR
PRICES.
SDE ANALYSIS : SDE ANALYSIS IS DONE
BASED ON PURCHASING PROBLEM
ASSOCIATED WITH ITEMS ON DAY TO DAY
BASIS.

THANK YOU