The Techniques We Used In Store Inventory Control.
Store / Inventory control technique is the important tool in the hands of the modern management. It is indispensable for each and every manufacturing concern. The following are the important techniques of store control.
Fixation of various stock level: Under this method various stock levels are fixed scientifically to avoid over stocking and under stocking of materials. Over stocking of materials leads to unnecessary blockage of materials and investment and under stocking of material leads to disputation in production. These are the following stock levels which help for planning of materials.
Economic ordering quantity: Economic ordering quantity is that quantity of material which are to be ordered in one time in order to minimize ordering cost, carrying cost as well as cost of holding stock.
Perpetual inventory system: Perpetual inventory system is defined as “a system of records maintained by the controlling department which reflects the physical movement of stocks and their current balances.”
Bin card and store ledger constitute the bedrock of perpetual inventory system. It is a method of recording store after every receipt & every issue and their current balances to avoid closing down the firm for stock taking. To ensure accuracy the physical verification may be made which must have to agree with the balance of Bin Card & store ledger. If there is any discrepancy between the two, it may be adjusted by preparing debit note and credit note.
A.B.C. Analysis: A. B. C. analysis is always a better control system. Under this method inventory items are classified in to three categories such as A. B. C. basing upon its value and cost significance. The number of items and the value of each class is expressed as percentage of the total and categorize as under.
Items of high value and small in numbers termed as ‘A’
Items of moderate value and moderate in number is termed as ‘B’
Items of small in value and large in number is termed as ‘C’
V.E.D. Analysis: This method is used for control of spare parts. VED is the symbol of
- Vital spare parts: Are those spares whose cost of stock out is very high.
- Essential spare parts: Are those spares which are essential for the production to continue.
- Desirable spare parts: Are those spares which are needed but their absence even a week or more will not lead to stoppage of production.
Inventory turn over ratio: Inventory turn over ratio is one of the method of store control. it indicates how quickly the stocks are converted in to sale. Low inventory turn over ratio indicates the inefficient management in inventory & high inventory turn over ratio is always implies favorable situation.
What is Purchase Requisition?
Purchase requisition is a form used as a formal requisite by the store keeper to the purchasing department to purchase requisite quantity of materials. When store reaches at ordering level the store keeper initiates purchase requisition to the purchasing department for fresh supply of materials. The purchase department may not purchase materials according to his own accord. When purchase officer receives purchase requisition. He arranges for purchase of materials.