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MANAGEMENT
Work in
process
Cash or cash-equivalent.
(An asset which is not a current asset is classified as a non current asset)
RELEVANCE: INVENTORY
Constitute significant part of current assets.
On an average, inventory forms approx 60% of
current assets in Public Limited Companies in India.
Huge financial implications.
Effective and efficient management is imperative to
avoid unnecessary investment.
Improper inventory management affects long term
profitability and may cause failure ultimately.
10 to 20% of inventory can be reduced without any
adverse effect on production and sales by using
simple inventory planning and control techniques.
INVENTORY MGT
The act or manner of managing, handling, directing or
controlling the flow of inventory.
NEED :-
Demand related:-
Meet unexpected demands.
Smooth seasonal or cyclical demands.
Pricing related:-
Hedge against price increases.
Take advantage of quantity discounts.
Process and supply surprises related:-
Internal upsets in parts of or our own processes.
External delays in incoming goods.
OBJECTIVES: INVENTORY MGT
To maintain an optimum size of inventory for
efficient and smooth production and sales
operations.
Calculation of cost of goods Cost of goods sold = opening Directly calculated by applying
sold inventory + purchases the method of valuation of
closing inventory inventories
Methods:-
First In First Out (FIFO) Method.
5-1- _ _ _ 50 1.50 75
2011 250 2.06 515 250 2.06 515
2a PERPETUAL SYSTEM
Closing inventory calculated as residual figures:-