INVENTORY MANAGEMENT IN EXCEL

The purpose of inventory management is to Control the inventory operations and to ensure that proper record of all items is maintained. It process data reflecting changes to items in inventory. Once the data relating to customers order is received from an order processing system, a computer based inventory control system records changes to inventory levels and prepares appropriate stock reports, likewise receipt of materials are also recorded.

Through inventory management information regarding receipts and issue is taken and inventory balances are find out. Receipts and issue are entered in the worksheet .When each time you enter receipts or issue of materials ,worksheet automatically calculates the balance of inventory in hand .The worksheet also provides information to the management such as the present level of stock ,shortage and excess. Spreadsheet inventory control system thus help a business to provide high quality service to the management by minimizing investment in inventory and inventory carrying cost.

When the stock is reached at the re-order level, warning is given to the store keeper so that he could take necessary action to place fresh orders . In a manufacturing company ,it is necessary to distinguish between different categories of stock like raw materials ,work–in-progress and finished goods. The internal movement of all these items should be properly recorded and required reports should be produced .Excel worksheet always gives information relating to the latest levels of stock. The important objective of spreadsheet based stock control system is to minimize the investment in stock

With out affecting the flow of stock from one point to another. An important application of inventory management is the calculation of Economic Order Quantity (EOQ).Economic order quantity refers to that quantity of materials to be purchased at one time to optimize cost the thereon .At this point quantity the total cost and ordering cost will be the lowest.EOQ is given by the formula q=SQRT(2kd/h),where q is the quantity to order ,k is the cost to place an order, d is the demand and h is the holding cost of the product.

1. The variables are the amounts to order each month for each product. These are defined as Quantities in the worksheet.

2. The objective is to minimize the total cost. It is calculated by adding the individual costs for each product. Those costs are calculated by the following formula:-

Cost=h q/2+kd/q