The Inventory Control Procedure outlines

guidelines for controlling inventory stock

for ultimate salability, usability and
traceability, and ensuring efficient
selection and delivery of products.

 Done by dividing products into three categories to

make it easier to reorder them and figuring out the
 number of stocks need to be kept on shelves. These


categories include:
 one for small, cheap parts and products
 It is different from the other systems because it  one for somewhat larger and more costly
doesn’t rely on constant inventory updates. products
  A warehouse manager simply looks at his  one for very large, expensive products
 inventory levels once a week or month (or  Used by companies that sell products in a wide variety
of categories and sizes.
 whatever timeframe they wish) and decides how  It segregates inventory into 3 categories based on its
many products the company will need from that revenue and control measures required: A is 20% of
 time to the next inventory check. items with 80% of total revenue and hence asks for
  It is risky for it could lead to product shortages tight control; B is 30% items with 15% revenue;
whereas ‘C’ is 50% of the things with least 5%
or overstock if it isn’t done right.
  For companies that specialize in big, slow-selling revenue and henceILLUSTRATION
treated as most liberal.
 products, like pianos, refrigerators, caskets, etc.
 ILLUSTRATION






 

ILLUSTRATION

  It involves the storage of goods in two

  bins, one of which contains working

stock and the other containing reserve
stock.
 It has two stockpiles of products: one
for normal operations and one for
backup use only.
 It could be a good system for
retailers, wholesalers and
manufacturers of electronics, books,
toys and other products that are less
prone to decay.
 To use this system, reordering goods
as soon as the working stock bin is
empty should be done, so that
replacement parts arrive before the
reserve stock bin is empty

ILLUSTRATION

 It is a computer program that

automatically routes orders to
the designated order system,
in the case of odd lot orders,
or directly to brokers working
on the floor of an exchange.
 It has the capacity to execute
orders with both speed and
accuracy.
 It has the ability to provide
another layer of security
against fraud, thereby helping
to control risk too.
 ILLUSTRATION

 It is the simplest way to manage

inventory.
 It works well for many types of
companies. A retailer and a seller of
a lot of inexpensive products can use
this, Minimum-Maximum System, just PROBLEM EXAMPLE:
as well as a manufacturer who uses The Maham Autos deals in cars. The selected data is given
a lot of small parts to build their end below:
products. Annual demand:
 The approach is built on two Maximum demand: 730 cars per year
conditions: initially we start by Normal or average demand: 365 cars per year
Minimum demand: 283 cars per year
tracking the current stock level -
Lead time in days:
which is typically the sum of the Maximum lead time: 98 days
stock-on-hand, plus the stock-on- Normal or average lead time: 87 days
order for every single SKU. Then, Minimum lead time: 73 days
when the total stock reaches a SOLUTION
Minimum value, the system Maximum demand per day: 730 cars/365 days = 2 cars
automatically alerts the user, and a per day
subsequent reorder is placed Average demand per day: 365 cars/365 days = 1 car
targeting a specific Maximum total per day
stock level. Minimum level of inventory = (Maximum demand per day
× Maximum lead time) – (Average demand per day ×
Average lead time)
= (2 units × 98 days) – (1 unit × 87 days)
= 196 units – 87 units
= 109 units

REFERENCES

Lockard,R. (2011). Which Inventory

Control is Right for your Business.
SALGADO, LOVELY
www.fishbowlinventory.com/blog/201 JAZE A.
1/12/19/inventory-control-methods- BSA 2B
business/