Inventory System

A Conceptual Analysis

Abhinav Goel Dr. Suraksha Bansal

Lecturer Sr.Lecturer

DIMS, MEERUT

INDIA

DIMS, MEERUT

INDIA

A detailed list of movable articles or items which used in the progress of an organization having economic value is called inventory.

In other words inventory can be broadly defined as a stock of goods which are stolled for a specific given period for future production in a factory. The stocked item can be considered well for the future production planning if they are listed through the same process and it will enhance the economic value of an organization. A certain amount of inventory is essential for smooth running of an organization.

In manufacturing or process industry if the critical row material is not available then it may cause to close the plant or industry. In case of public utilities such as thermal power generation will be reversely affected unless there

Inventory is an essential part of business life. An inventory model is considered with two decisions. First how much to order at one time and second when to order, so that the total inventory cost may be minimized. The first requirement to inventory is to receive exact quantity of stock at exact time of requirement.

is adequate stock of coal to run a business industry, shop, and factory etc. there is an essential need of having sufficient inventory. Without sufficient inventory any business can not be survive in the market. The major objective of inventory is that to get maximum customer satisfaction in minimum cost on material. To get an optimal solution of the problem we have to require a scientific approach under given investment and to earn maximum profit in minimum cost. Study of such type operation is called inventory control.

There are some major objectives to run a smooth operation of a production system and for getting an optimal solution of these objectives, there is a requirement of a scientific approach so study of such type of operations are called inventory control.

Centuries ago inventories did not require a scientific management and also considered as a majorment of business failure but presently fast turn over has become the main goal to be pursued for more profit and less risk. That is today inventory management technique become a necessary evil for business whether it is manufacturing unit, transportation unit, medical fields or retail chains as big bajar, v-mart, flu, aapka bajar etc. however in the daily routine we also use inventory managements techniques whether we know about it or not.

Inventory is an essential part of business life. An inventory model is considered with two decisions. First how much to order at one time and second when to order, so that the total inventory cost may be minimized. The first requirement to inventory is to receive exact quantity of stock at exact time of requirement.

To get maximum costumer satisfaction we have to provide satisfactory service through supplier, factory and retailer, the most of the requirement we shall maintain more stable operation or work level.

Inventory has some objectives to achieve the organization goals and to earn maximum profit as inventory deal with controlling and the financial condition and the consumption of the material should be minimum.

Another object of inventory is to be obtaining an optimum balance between the last due to non availability of an item and cost of carrying stocks of product. To ensure about the non avability of an item is the important object of inventory to reduce the production cost in an organization.

To study of row material components stages of manufacturing, inventory can be classified into different ways like production inventory, work in process inventory, finished good inventory, maintenance, and repair and operating

inventory. These inventories are helpful to study of row material stages of manufacturing in a factory, stocked item and sold item etc .These inventories also have a record of repairing and production process. Inventories are also needed to provide the economic and efficient operation in an organization for expanding lot size which is adopted to obtain quantity discount, reduced transportation and cost an minimize handling and receiving costs ,anticipation stocks for periodic change in demand. Inventory is also required to ensure ready supplies to the consumers and is also needed to prevent the risk of breakdown of production.

To study of economic parameters of an organizations inventory has been considered in different costs.

(A) Storage cost which represents the cost of carrying inventory stocks.

(B) Shortage cost which represents the shortage in row material or sphere parts affected in the market.

(C) Ordering cost that starts with the requisition sent to the purchased order and of following it up.

(D) Setup cost which includes the fixed cost associated with obtaining the goods by manufacturing.

With the help of these costs we find the economic status of an organization which is very important for the production process and to achieve the organization goals.

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