2. OBJECTIVES
i. Maintain stock record (manual and electronic)
Stock records:
(a) Stock requisition forms;
(b) Stock record/bin cards;
(c) Storage of office supplies;
(d) Reporting on stock levels – Last-In-First-Out
(LIFO), First-In-First-Out (FIFO); Average Cost
(AVCO);
(e) Use of software and electronic devices in stock
control, including inventory software, bar code
scanners.
3. Stock Recording
Recording stock can be done manually and electronically.
The following are ways that the procurement and
management office maintains its stock records:
(a) Stock requisition forms;
(b) Stock record/bin cards;
(c) Storage of office supplies;
(d) Reporting on stock levels – Last-In-First-Out (LIFO),
First-In-First-Out (FIFO); Average Cost (AVCO);
(e) Use of software and electronic devices in stock control,
including inventory software, bar code scanners.
4. Stock Requisition form
Request by various departments for items from the warehouse or
storeroom are usually prepared on stock requisition form. The
form is usually approved by the head of the requesting
department. An example of a requisition form is depicted in
Figure. 1.
5. Fig. 1 Stock requisition form
Stock Requisition Requisition No: #359
ABC Company Limited Date: November 12, 2018
From: Human Resources Department
To: Warehouse
Please provide the following items:
Quantity Description
100 reams A 4 Photocopy paper
Approved by: Junior Hinds, Head of Department
6. Stock record/bin card
Stock record/bin card may be used to monitor additions to and
withdrawals from stock. The stock record card will indicate the
maximum and minimum stock levels, as well as the re-order
level. When stock is purchased, details such as the invoice number
of the transaction and the name of the supplier are included. When
stock is withdrawn from the warehouse, details such as the
requisition number and the name of the department requesting the
goods are included as well. After each transaction, the balance
remaining is calculated. Figure 2. illustrates how the stock
record/bin card is used.
7. STOCK RECORD CARD
Item: Receipt Books
Maximum stock level: 120
Minimum stock level: 50
Re-order level: 25
Stock location: Row 2 shelf 3
Date Details Receipts Issues Balance
2010
28 February Balance b/f - - 25
3 March Salesman Bookstore Invoice
#6012
40 - 65
5 March Sales Department Requisition
#301
- 5 60
17 March Accounts Department
Requisition #421
- 10 50
Re-order
level
Fig. 2 Stock Record Card
8. Bin systems
The bin system may also be used to control stock. There
are two types:
• One-bin system;
• Two-bin system.
STOCK RECORDING
SYSTEMS
9. One bin system
In the one bin system a bin or storage container is
filled with stock. When the stock has reached a
pre-determined re-order level, more stock is
ordered to fill the bin once again.
10. Two-bin system
In the two bin system two bins or containers are
utilized. Both are filled with stock and when one
is empty the second one is used while the first
one is restocked.
11. STORAGE OF OFFICE SUPPLIES
Office supplies are usually stored in lockable
cabinets or cupboards in a business organization.
This helps to prevent damage or deterioration of
the stored items; limited access reduces the risk of
theft; fast moving items are made easily accessible;
and to prevent safety hazards from occurring.
12. Computerized stock recording
The process of stock control is usually
computerized in medium-sized and large
organizations. Even, small firms are able to take
advantage of the benefits of computerized systems,
because of the reductions in the cost of technology.
Computerized stock control operates on the same
principles as the manual system however,
information is usually easier to retrieve.
13. Benefits of the computerized
inventory system
Benefits:
i. Stock valuation can be done quickly and accurately;
ii. It allows fast-selling items to be identified quickly and in
some cases re-order automatically;
iii. It checks how well stock is moving and is able to identify
slow-selling items, thereby prevent a build up of unwanted
stock;
iv. Information can be used to predict seasonal fluctuations;
v. It processes and prepares purchase orders.
14. Types of computerized systems
(stock control software)
Computerized systems may include:
• The use of barcodes (or Universal Product Codes –
UPCs);
• RFID (radio frequency identification);
• Atrex12 – inventory control and point of sale system;
• Soft Trader – inventory management
• Mamut – point of sale system;
• Pastel My Business – inventory control and purchases.
15. Barcodes (UPCs)
Barcodes consist of a series of parallel, adjacent bars and
spaces. They are a cheap, simple and accurate way of
encoding and reading information by using economical
barcodes readers.
When products filled with barcodes are scanned, using the
point of sale system at a cash desk, it automatically updates
the database show one less of that particular item in stock.
This allows businesses to know how much of an item is in
stock at any time. This system can also automatically alert
the business when the re-order level has been reached so
that it can replenish its stock before it runs out.
17. Radio frequency
identification (RFID)
RFID comes in a variety of shapes and sizes and is placed
on products in tags. It consists of a micro-chip with an
antenna that uses radio waves to send information to a
database. Its primary purpose is to identify and track
inventory and to prevent over – and understocking.
18.
19.
20.
21. STOCK VALUATION
This system is mainly used to ascertain the closing stock for
the final accounts such as the balance sheet. The three
primary methods of valuing stock includes:
FIFO (First In First Out)
LIFO (Last In First Out)
AVCO (Average Cost)
22. FIFO
The First In First Out (FIFO) method is mainly
used business organization, for example,
supermarkets or fast food restaurants that stock
perishable items such as fruits, vegetables, bread
and diary products. This method simply implies
that the first set of stock bought will be the first set
of stock to be sold or used by the business.
23. LIFO
This method is usually used by business for
period of rising prices, where all stock is
sold at the current market price, for
example, gasoline. This method of stock
valuation assumes that the most recent stock
will be the first set of stock to be sold or
used in the business.
24. AVCO
In this method of stock valuation the average
cost for the period, is divided by the total
cost of the material by the number of units.
The Average Cost Method (AVCO) is more
reliable in period of price fluctuations.
25. Types of stock taking
There are two methods of stocking taking/inventory:
• Periodic stock taking/inventory – stock taking is carried
out at the end of the organization’s financial year, to
ascertain purchases and stock figures for the final
accounts such as the balance sheet.
• Perpetual or continuous stocktaking – stock taking is
done after each stock movement, whether purchases or
sales so that the balance is calculated. This method
allows businesses to respond accurately to customer
demand and helps minimize the risk of running out of
stock.
26.
27. GROUP PRESENTATION
ASSIGNMENT
Which is the best method - LIFO or FIFO?
The teacher would place the students in groups of four (4)
and would give a list of items for them to decide which
methods of stock valuation is the best suited for it. Each
group would do a short presentation, justifying why they
have chosen their methods.
28. REFERENCES
Carysforth, C., Neid, M., Maxime, C. & Metz, Y. (2012). Office Administration
for CSEC. A Caribbean Examination Council Study Guide. Nelson Thornes.
Finisterre, S., Payne, L., & Reid, J. (2004). Longman Office Administration for
CXC. Pearson Education Limited.
Trendfield-Newsome, A. & Walker, C. (2011). Office Administration for CSEC
Examinations. Macmillan Publisher Limited.
Trendfield-Newsome, A. & Walker, C. (2011). Office Administration for CSEC
Examinations. Macmillan Publisher Limited.
