INVENTORY  ABC  RECORD

MANAGEMEN  ANALYSIS
CYCLE COUNTING  ACCURACY
CONTROL OF SERVICES INVENTORIES
T
 ABC ANALYSIS
(USED TO ESTABLISH POLICIES THAT FOCUS ON CRITICAL PARTS)
CLASS B (MEDIUM Annual
CLASS A (HIGH Annual Vol) Vol) CLASS C (LOW Annual Vol)

 Expensive Inventory  Moderate Value Inventory  Low Cost Inventory

 Accurate Control Required  Moderate Control Required  Minimum Control Required

Policies Employed: Other Criteria:

 More emphasis on supplier development for A items  Anticipated engineering changes
 Tighter physical inventory control for A items  Quality & delivery problems
 More care in forecasting A items  High unit cost
ABC ANALYSIS EXAMPLE
 RECORD ACCURACY
• Accurate records are a critical
ingredient in production and
inventory systems
• Allows organization to focus on
what is needed
• Necessary to make precise
decisions about ordering,
scheduling, and shipping
• Incoming and outgoing record
keeping must be accurate
• Stockrooms should be secure
CYCLE COUNTING
• Items are counted and records
updated on a periodic basis
• Often used with ABC analysis to
determine cycle
Advantages:
• Eliminates shutdowns and
interruptions
• Eliminates annual inventory
adjustment
• Trained personnel audit inventory
accuracy
• Allows causes of errors to be
identified and corrected
• Maintains accurate inventory
records
CONTROL OF SERVICES
• Can be a critical component of
profitability
• Losses may come from shrinkage
or pilferage
Applicable techniques include:
• Good personnel selection,
training, and discipline
• Tight control on incoming
shipments
• Effective control on all goods
leaving facility
CYCLE COUNTING EXAMPLE