Ce diaporama a bien été signalé.
Nous utilisons votre profil LinkedIn et vos données d’activité pour vous proposer des publicités personnalisées et pertinentes. Vous pouvez changer vos préférences de publicités à tout moment.
INVENTORY MANAGEMENT<br />HYDERALI C.K<br />106004<br />
INTRODUCTION<br />Significant part of the current asset<br />Large amount of inventory leads to considerable lapse of fund...
Cont………..<br />Inventory Control   measure and regulate  to predetermine  <br />     -size for order or production, <br />...
Nature of inventories<br />Raw material<br />Work in process<br />Finished goods<br />
NEED TO HOLD INVENTORIES<br />Transaction motive(smooth production)<br />Precautionary motive(demand)<br />Production moti...
PRODUCTION CYCLE<br />Time span between introduction raw material to the conversion into the finished product <br />
OBJECTIVE OF INVENTORY MANAGEMENT<br />To meet unforeseen future demand due to variation in forecast figures and actual fi...
Cont……..<br />To gain economy of production or purchase in lots.<br />To reduce loss due to changes in prices of inventory...
Cont……..<br />To balance the stock out cost/opportunity cost due to loss of sales against the costs of inventory.<br />To ...
Optimum level of inventory<br />It lies between two danger point,i.e between excessive and inadequate level<br />
Major danger in the overinvesment<br />Unnecessary tie-up of firm’s fund and loss of profit<br />Excessive carrying cost<b...
Major danger in the inadequate level<br />Production hold-up<br />Failure to meet delivery commitment<br />
Effective inventory management<br />Continues supply of raw material to facilitate production<br />Maintain sufficient sto...
Cont……..<br />Minimise the carrying cost and time<br />Control investment in inventories and keep it an optimum level<br />
Inventory management techniques<br />Aim to maximise the shareholder wealth <br />For efficient inventory management, we h...
Economic order quantity<br />ordering materials whenever stock     	reaches the reorder point<br />It tells how production...
Ordering cost<br />It is the entire cost to acquire the raw material(supplies).<br />It include<br />       -Requisitionin...
Carrying cost<br />It is the cost incurred to maintain the given level of inventory<br />It include<br />        -Warehous...
Ordering and carrying cost trade off<br />Optimum level of inventory referred to EOQ<br />To determine EOQ-three approache...
Trial and error approach<br />Assumptions <br />      -known annual requirement<br />      -steady usage<br />      -order...
Example – illustrating the trial and error  approach<br />Estimated annual requirement, A =1200unit<br />Purchasing cost p...
Total cost in the various orders <br />
Inference from the TC table<br />OrderTotal cost     <br />1.For single order(once in year)             637.5<br />2.12 or...
Order formula approach <br />It is more easier  way compared to trial and error approach <br />Assumption<br />     -carry...
Cont…………<br />O=ordering cost per order<br />A=Total annual requirement<br />Q=order size<br />Per unit carrying cost=c<br...
Cont……..<br />Average inventory         =Q/2<br />TCC(Total carrying cost)=(Q/2)Xc<br />TC(Total cost)  =TOC+TCC<br />TC  ...
Inference from the equation<br />For larger quantity order =carrying cost    								increases<br />                      ...
Cont……….<br />EOQ should lie between larger & lower quantity order<br />So EOQ = differentiate TC and equate to zero<br />...
In the earlier problem<br />A=1200<br />O=37.5<br />c=1<br />EOQ=((2AO)/c)^.5<br />            =((2X1200X37.5)/1)^.5<br />...
Graphical method<br />Vertical axis    =costs<br />                                -carrying cost (TCC)<br />             ...
Cont……<br />Tc (Total Cost)<br />Carrying Cost (Q/2)H<br />Cost (Rs.)<br />DS/Q (Ordering Cost)<br />EOQ<br />Order Quanti...
Cont……<br />Carrying cost increases with increase order size, because of  large have to be maintained<br />Ordering cost d...
Quantity discount<br />Supplier offer discount for large order size (above EOQ)<br />Net return=discount savings –addition...
Example<br />d=discount rate (.005)<br />Discount on savings=dXPXA=(.005X50X1200)<br />                                   ...
Cont……….<br />Additional carrying cost=(cq/2)-(cQ/2)<br />                                            =c/2(q-Q)<br />     ...
Cont……<br />Net return=[dPA+ savings on   - additional <br />                                      discount]       carryin...
Important Terms<br />Minimum Level – It is the minimum stock to be maintained for smooth production.<br />Maximum Level – ...
Case study of inventory control (ABC)<br />Several types of inventories are there in ABC<br />Classify the inventories int...
Cont…….<br />ABC analysis concentrate on important items<br />    =Control by important exception(CIE)<br />Classified in ...
Step involved in implementing the ABC analysis<br />Classify ,determine expected use & price of the inventories<br />Deter...
ABC analysis table<br />
Inference <br />Assumption =1&2 ,3,4&5,6&7 fall in the same category<br />1&2=item    A<br />3,4&5=item B<br />6&7    =ite...
                          Thank you<br />
Prochain SlideShare
Chargement dans…5
×

inventory control & ABC analysis ppt

39 827 vues

Publié le

  • Earn a 6-Figure Side-Income Online... Signup for the free training HERE ★★★ https://tinyurl.com/y3ylrovq
       Répondre 
    Voulez-vous vraiment ?  Oui  Non
    Votre message apparaîtra ici
  • DOWNLOAD THI5 BOOKS INTO AVAILABLE FORMAT (Unlimited) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download Full EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... ACCESS WEBSITE for All Ebooks ......................................................................................................................... Download Full PDF EBOOK here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download EPUB Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... Download doc Ebook here { http://bit.ly/2m6jJ5M } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Répondre 
    Voulez-vous vraiment ?  Oui  Non
    Votre message apparaîtra ici
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Répondre 
    Voulez-vous vraiment ?  Oui  Non
    Votre message apparaîtra ici
  • Want to earn $4000/m? Of course you do. Learn how when you join today! ◆◆◆ http://scamcb.com/ezpayjobs/pdf
       Répondre 
    Voulez-vous vraiment ?  Oui  Non
    Votre message apparaîtra ici
  • Good one very nicely pesanted and easy to understand
       Répondre 
    Voulez-vous vraiment ?  Oui  Non
    Votre message apparaîtra ici

inventory control & ABC analysis ppt

  1. 1. INVENTORY MANAGEMENT<br />HYDERALI C.K<br />106004<br />
  2. 2. INTRODUCTION<br />Significant part of the current asset<br />Large amount of inventory leads to considerable lapse of fund<br />Imperative to manage to avoid unnecessary investment <br />
  3. 3. Cont………..<br />Inventory Control measure and regulate to predetermine <br /> -size for order or production, <br /> -safety stock<br /> - minimum level of order<br /> - maximum level of order<br />
  4. 4. Nature of inventories<br />Raw material<br />Work in process<br />Finished goods<br />
  5. 5. NEED TO HOLD INVENTORIES<br />Transaction motive(smooth production)<br />Precautionary motive(demand)<br />Production motive (price)<br />
  6. 6. PRODUCTION CYCLE<br />Time span between introduction raw material to the conversion into the finished product <br />
  7. 7. OBJECTIVE OF INVENTORY MANAGEMENT<br />To meet unforeseen future demand due to variation in forecast figures and actual figures.<br />To meet the customer requirement timely, effectively, efficiently and smoothly <br />To smoothen the production process.<br />To facilitate intermittent production of several products on the same facility.<br />
  8. 8. Cont……..<br />To gain economy of production or purchase in lots.<br />To reduce loss due to changes in prices of inventory items.<br />To meet the time lag for transportation of goods.<br />To balance various costs of inventory such as order cost or set up cost and inventory carrying cost<br />
  9. 9. Cont……..<br />To balance the stock out cost/opportunity cost due to loss of sales against the costs of inventory.<br />To minimize losses due to deterioration, obsolescence, damage etc. <br />
  10. 10. Optimum level of inventory<br />It lies between two danger point,i.e between excessive and inadequate level<br />
  11. 11. Major danger in the overinvesment<br />Unnecessary tie-up of firm’s fund and loss of profit<br />Excessive carrying cost<br />Risk of liquidity<br />
  12. 12. Major danger in the inadequate level<br />Production hold-up<br />Failure to meet delivery commitment<br />
  13. 13. Effective inventory management<br />Continues supply of raw material to facilitate production<br />Maintain sufficient stock of raw materials in periods of short supply and anticipate price changes<br />Maintain sufficient finished goods inventory for smooth sales operation, and efficient customer service<br />
  14. 14. Cont……..<br />Minimise the carrying cost and time<br />Control investment in inventories and keep it an optimum level<br />
  15. 15. Inventory management techniques<br />Aim to maximise the shareholder wealth <br />For efficient inventory management, we have to answer<br /> -how much should be ordered ? (ans;EOQ)<br /> -when should it be ordered ? (ans;reorder point)<br />
  16. 16. Economic order quantity<br />ordering materials whenever stock reaches the reorder point<br />It tells how production to be schedule<br /> optimum level of inventory involves two types of cost<br /> 1.ordering cost<br /> 2.carrying cost<br />
  17. 17. Ordering cost<br />It is the entire cost to acquire the raw material(supplies).<br />It include<br /> -Requisitioning<br /> -order placing<br /> -Transportation<br /> -Receiving, inspecting and storing<br /> -clerical and staff<br />
  18. 18. Carrying cost<br />It is the cost incurred to maintain the given level of inventory<br />It include<br /> -Warehousing<br /> -Handling<br /> -clerical and staff<br /> -Insurance<br /> -Deterioration and obsolescene<br />
  19. 19. Ordering and carrying cost trade off<br />Optimum level of inventory referred to EOQ<br />To determine EOQ-three approaches<br /> -Trial and error approach<br /> -Formula approach<br /> -Graphical approach<br />
  20. 20. Trial and error approach<br />Assumptions <br /> -known annual requirement<br /> -steady usage<br /> -ordering and carrying cost to be constant through the entire period <br />
  21. 21. Example – illustrating the trial and error approach<br />Estimated annual requirement, A =1200unit<br />Purchasing cost per unit, P(Rs) =50<br />Ordering cost (per order),O(Rs) =37.50<br />Carrying cost per unit,c(Re) =1<br />
  22. 22. Total cost in the various orders <br />
  23. 23. Inference from the TC table<br />OrderTotal cost <br />1.For single order(once in year) 637.5<br />2.12 order (once in a month) 500<br />3.4 order(once in every 3 month) 300<br />i.e.the third option is the most economic<br />
  24. 24. Order formula approach <br />It is more easier way compared to trial and error approach <br />Assumption<br /> -carrying cost per unit constant<br /> -ordering cost per order fixed<br />
  25. 25. Cont…………<br />O=ordering cost per order<br />A=Total annual requirement<br />Q=order size<br />Per unit carrying cost=c<br />Number of order=A/Q<br />TOC(Total order cost)=(A/Q)XO<br />
  26. 26. Cont……..<br />Average inventory =Q/2<br />TCC(Total carrying cost)=(Q/2)Xc<br />TC(Total cost) =TOC+TCC<br />TC =(A/Q)XO + (Q/2)Xc<br />
  27. 27. Inference from the equation<br />For larger quantity order =carrying cost increases<br /> =ordering cost decreases<br />For lower quantity order=carrying cost decreases<br /> =ordering cost increase<br />
  28. 28. Cont……….<br />EOQ should lie between larger & lower quantity order<br />So EOQ = differentiate TC and equate to zero<br />TC =(A/Q)XO + (Q/2)Xc<br />EOQ=-(AO)/Q^2+c/2=0<br />c/2=(AO)/Q^2<br />EOQ=Q=((2AO)/c)^.5<br />
  29. 29. In the earlier problem<br />A=1200<br />O=37.5<br />c=1<br />EOQ=((2AO)/c)^.5<br /> =((2X1200X37.5)/1)^.5<br /> =300<br />
  30. 30. Graphical method<br />Vertical axis =costs<br /> -carrying cost (TCC)<br /> -ordering cost (TOC)<br /> -Total cost (TC)<br />Horizontal axis =order size (Q)<br />
  31. 31. Cont……<br />Tc (Total Cost)<br />Carrying Cost (Q/2)H<br />Cost (Rs.)<br />DS/Q (Ordering Cost)<br />EOQ<br />Order Quantity Size (Q)<br />
  32. 32. Cont……<br />Carrying cost increases with increase order size, because of large have to be maintained<br />Ordering cost decline with increase in order size, because larger order size means lesser no of order<br />Total cost has the behaviour of both ordering cost and carrying cost<br />EOQ=deviating point of TC<br />
  33. 33. Quantity discount<br />Supplier offer discount for large order size (above EOQ)<br />Net return=discount savings –additional carrying cost<br />If return +ve = can avail the discount offer <br />If return –ve= order size should be EOQ level<br />
  34. 34. Example<br />d=discount rate (.005)<br />Discount on savings=dXPXA=(.005X50X1200)<br /> =300<br />Savings on the ordering cost=(OA/Q)-(OA/q)<br />Here Q=EOQ & q=discount quantity(400)<br />=O[A/Q-A/q]<br />=37.5[1200/300-1200/400]<br /> =37.5<br />
  35. 35. Cont……….<br />Additional carrying cost=(cq/2)-(cQ/2)<br /> =c/2(q-Q)<br /> =1/2(400-300)<br /> =50<br />
  36. 36. Cont……<br />Net return=[dPA+ savings on - additional <br /> discount] carrying cost<br /> =(300+37.5)-50<br /> =287.5<br />Here net return is +ve= firm should order 400<br /> unit<br />
  37. 37. Important Terms<br />Minimum Level – It is the minimum stock to be maintained for smooth production.<br />Maximum Level – It is the level of stock, beyond which a firm should not maintain the stock.<br />Reorder Level – The stock level at which an order should be placed.<br />Safety Stock – Stock for usage at normal rate during the extension of lead time.<br />
  38. 38. Case study of inventory control (ABC)<br />Several types of inventories are there in ABC<br />Classify the inventories into<br /> -High value =A<br /> -Least value =C<br /> -reasonable attention=B(A&C)<br />
  39. 39. Cont…….<br />ABC analysis concentrate on important items<br /> =Control by important exception(CIE)<br />Classified in the importance of their relative value=Proportion Value Analysis(PVA)<br />
  40. 40. Step involved in implementing the ABC analysis<br />Classify ,determine expected use & price of the inventories<br />Determine total value of item(expected unitXunit price)<br />Rank the items (according to total value)<br />Compute the ratios (no.of unit/total unit) & (each value of item/total value of all item)<br />Combine on the basis of relative values (A,B,C)<br />
  41. 41. ABC analysis table<br />
  42. 42. Inference <br />Assumption =1&2 ,3,4&5,6&7 fall in the same category<br />1&2=item A<br />3,4&5=item B<br />6&7 =item C<br />
  43. 43. Thank you<br />

×