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Inventory Control Methods - Input-Output Ratio, Stock Turnover Ratio & FNSD Analysis Video Lecture | Commerce & Accountancy Optional Notes for UPSC

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FAQs on Inventory Control Methods - Input-Output Ratio, Stock Turnover Ratio & FNSD Analysis Video Lecture - Commerce & Accountancy Optional Notes for UPSC

1. What is the input-output ratio in inventory control methods?
Ans. The input-output ratio in inventory control methods refers to the relationship between the amount of input (such as raw materials) used in production and the amount of output (finished goods) produced. It helps in determining the efficiency of inventory management by analyzing how efficiently resources are utilized.
2. How is the stock turnover ratio calculated in inventory management?
Ans. The stock turnover ratio is calculated by dividing the cost of goods sold by the average inventory during a specific period. It helps in measuring how quickly a company is selling its inventory and replacing it with new stock. A high stock turnover ratio indicates efficient inventory management.
3. What is FNSD analysis in the context of inventory control methods?
Ans. FNSD analysis stands for Fast-Moving, Non-Moving, Slow-Moving, and Dead Inventory analysis. It categorizes inventory items based on their movement rate and helps in identifying which items are selling quickly, slowly, or not at all. This analysis assists in making informed decisions about inventory stocking levels.
4. How can businesses improve their stock turnover ratio?
Ans. Businesses can improve their stock turnover ratio by implementing strategies such as reducing excess inventory, optimizing supply chain management, improving demand forecasting accuracy, and adopting just-in-time inventory practices. These measures help in increasing the speed at which inventory is sold and replenished.
5. Why is it important for businesses to monitor their input-output ratio in inventory management?
Ans. Monitoring the input-output ratio in inventory management is crucial as it helps businesses in evaluating the efficiency of their production processes, identifying areas of waste or inefficiency, and making informed decisions about resource allocation. By maintaining a balanced input-output ratio, businesses can optimize their inventory control methods and improve overall profitability.
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