inventory management
INVENTORY MANAGEMENT
Meaning and Definition of Inventory: In dictionary meaning of inventory is a “detailed list of goods, furniture etc.” Many understand the word inventory, as a stock of goods, but the generally accepted meaning of the word ‘goods’ in the accounting language, is the stock of finished goods only. In a manufacturing organization, however, in addition to the stock of finished goods, there will be stock of partly finished goods, raw materials and stores. The
Collective name of these entire items is ‘inventory’. The term ‘inventory’ refers to the stockpile of production a firm is offering for sale and the components that make up the production. 186 The inventory means aggregate of those items of tangible personal property which
(i) are held for sale in ordinary course of business.
(ii) are in process of production for such sales.
(iii) they are to be currently consumed in the production of goods or services to be available for sale.
Objectives of Inventory Management : The primary objectives of inventory management are:
(i) To minimize the possibility of disruption in the production schedule of a firm for want of raw material, stock and spares.
(ii) To keep down capital investment in inventories.
So it is essential to have necessary inventories. Excessive inventory is an idle resource of a concern. The concern should always avoid this situation. The investment in inventories should be just sufficient in the optimum level. The major dangers of excessive inventories are:
(i) the unnecessary tie up of the firm’s funds and loss of profit. (ii) excessive carrying cost, and
(iii) the risk of liquidity
Inventory Control Inventory control is concerned with the acquisition, storage, handling and use of inventories so as to ensure the availability of inventory whenever needed, providing adequate provision for contingencies, deriving maximum economy and minimizing wastage and
Meaning and Definition of Inventory: In dictionary meaning of inventory is a “detailed list of goods, furniture etc.” Many understand the word inventory, as a stock of goods, but the generally accepted meaning of the word ‘goods’ in the accounting language, is the stock of finished goods only. In a manufacturing organization, however, in addition to the stock of finished goods, there will be stock of partly finished goods, raw materials and stores. The
Collective name of these entire items is ‘inventory’. The term ‘inventory’ refers to the stockpile of production a firm is offering for sale and the components that make up the production. 186 The inventory means aggregate of those items of tangible personal property which
(i) are held for sale in ordinary course of business.
(ii) are in process of production for such sales.
(iii) they are to be currently consumed in the production of goods or services to be available for sale.
Objectives of Inventory Management : The primary objectives of inventory management are:
(i) To minimize the possibility of disruption in the production schedule of a firm for want of raw material, stock and spares.
(ii) To keep down capital investment in inventories.
So it is essential to have necessary inventories. Excessive inventory is an idle resource of a concern. The concern should always avoid this situation. The investment in inventories should be just sufficient in the optimum level. The major dangers of excessive inventories are:
(i) the unnecessary tie up of the firm’s funds and loss of profit. (ii) excessive carrying cost, and
(iii) the risk of liquidity
Inventory Control Inventory control is concerned with the acquisition, storage, handling and use of inventories so as to ensure the availability of inventory whenever needed, providing adequate provision for contingencies, deriving maximum economy and minimizing wastage and