PPT: Production and Inventory Control Mechanical Engineering Notes | EduRev

Manufacturing and Industrial Engineering

Mechanical Engineering : PPT: Production and Inventory Control Mechanical Engineering Notes | EduRev

 Page 1


INVENTORY CONTROL
Page 2


INVENTORY CONTROL
INTRODUCTION
? The term inventory means the value or amount of 
materials or resource on hand. It includes raw 
material, work-in-process, finished goods & stores 
& spares. 
? Inventory Control is the process by which 
inventory is measured and regulated according to 
predetermined norms such as economic lot size for 
order or production, safety stock, minimum level, 
maximum level, order level etc. 
? Inventory control pertains primarily to the 
administration of established policies, systems & 
procedures in order to reduce the inventory cost.
Page 3


INVENTORY CONTROL
INTRODUCTION
? The term inventory means the value or amount of 
materials or resource on hand. It includes raw 
material, work-in-process, finished goods & stores 
& spares. 
? Inventory Control is the process by which 
inventory is measured and regulated according to 
predetermined norms such as economic lot size for 
order or production, safety stock, minimum level, 
maximum level, order level etc. 
? Inventory control pertains primarily to the 
administration of established policies, systems & 
procedures in order to reduce the inventory cost.
OBJECTIVES OF INVENTORY CONTROL
? To meet unforeseen future demand due to 
variation in forecast figures and actual figures.
? To average out demand fluctuations due to 
seasonal or cyclic variations.
? To meet the customer requirement timely, 
effectively, efficiently, smoothly and 
satisfactorily.
? To smoothen the production process.
? To facilitate intermittent production of several 
products on the same facility.
? To gain economy of production or purchase in 
lots.
Page 4


INVENTORY CONTROL
INTRODUCTION
? The term inventory means the value or amount of 
materials or resource on hand. It includes raw 
material, work-in-process, finished goods & stores 
& spares. 
? Inventory Control is the process by which 
inventory is measured and regulated according to 
predetermined norms such as economic lot size for 
order or production, safety stock, minimum level, 
maximum level, order level etc. 
? Inventory control pertains primarily to the 
administration of established policies, systems & 
procedures in order to reduce the inventory cost.
OBJECTIVES OF INVENTORY CONTROL
? To meet unforeseen future demand due to 
variation in forecast figures and actual figures.
? To average out demand fluctuations due to 
seasonal or cyclic variations.
? To meet the customer requirement timely, 
effectively, efficiently, smoothly and 
satisfactorily.
? To smoothen the production process.
? To facilitate intermittent production of several 
products on the same facility.
? To gain economy of production or purchase in 
lots.
? To reduce loss due to changes in prices of 
inventory items.
? To meet the time lag for transportation of goods.
? To meet the technological constraints of 
production/process.
? To balance various costs of inventory such as 
order cost or set up cost and inventory carrying 
cost.
? To balance the stock out cost/opportunity cost 
due to loss of sales against the costs of inventory.
? To minimize losses due to deterioration, 
obsolescence, damage, pilferage etc. 
? To stabilize employment and improve lab our 
relations by inventory of human resources and 
machine efforts.
Page 5


INVENTORY CONTROL
INTRODUCTION
? The term inventory means the value or amount of 
materials or resource on hand. It includes raw 
material, work-in-process, finished goods & stores 
& spares. 
? Inventory Control is the process by which 
inventory is measured and regulated according to 
predetermined norms such as economic lot size for 
order or production, safety stock, minimum level, 
maximum level, order level etc. 
? Inventory control pertains primarily to the 
administration of established policies, systems & 
procedures in order to reduce the inventory cost.
OBJECTIVES OF INVENTORY CONTROL
? To meet unforeseen future demand due to 
variation in forecast figures and actual figures.
? To average out demand fluctuations due to 
seasonal or cyclic variations.
? To meet the customer requirement timely, 
effectively, efficiently, smoothly and 
satisfactorily.
? To smoothen the production process.
? To facilitate intermittent production of several 
products on the same facility.
? To gain economy of production or purchase in 
lots.
? To reduce loss due to changes in prices of 
inventory items.
? To meet the time lag for transportation of goods.
? To meet the technological constraints of 
production/process.
? To balance various costs of inventory such as 
order cost or set up cost and inventory carrying 
cost.
? To balance the stock out cost/opportunity cost 
due to loss of sales against the costs of inventory.
? To minimize losses due to deterioration, 
obsolescence, damage, pilferage etc. 
? To stabilize employment and improve lab our 
relations by inventory of human resources and 
machine efforts.
FACTORS AFFECTING INVENTORY CONTROL
? Type of product
? Type of manufacture
? Volume of production
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