Table of Contents
Explain inventory (What is the inventory?)
- Inventory is a physical stock item that a production enterprise keeps in hand for the efficient running of its production.
- Inventory consists of raw materials, component parts, supplies or finished assemblies etc. which are purchased from an outside source and the goods manufactured in the enterprise itself.
- Inventory control may be defined as, the systematic location, storage and recording of goods in such a way that the desired degree of service can be made to the operating shops at the minimum ultimate cost.
- Inventory serves as the buffer or safety against its planning, sudden demand continuous production etc. Any form of inventory is a sign of inefficiency.
Level of inventory may be reduced by the following methods.
- better planning
- continuous monitoring of stock (on-line)
- reliable vendors
- use of Just-in-Time (JIT) concepts.
Purpose of inventory control
Inventory controls are needed to have a proper track of the inventory, i.e. to find that the available movable material and to find out that material of required size and quality in required quantity is available so that manufacturing work does not suffer at all.
Such a control aims at having periodic inventory check-up and those who are supposed to exercise control are to ensure that the needed material is purchased and stocked when that is available at economical prices, so that manufacture is not required to unnecessarily waste the money. Inventory means keeping unto and accurate record of the available material and the objective of this control is to ensure that this record is properly and carefully kept.