Inventory analysis involves examining inventory levels to determine the optimal amount to keep on hand, balancing ordering and holding costs. It requires considering additional factors like production strategies, financing availability, and market demands. Inventory control aims to determine and maintain optimal investment in inventory given associated benefits and costs. It relates to policies that determine what materials a company will stock and in what quantities. Benefits of inventory analysis include procuring materials efficiently, preventing production delays, reducing excess inventory investment, and lowering losses. Demerits are that business risks can't be fully eliminated and inventory objectives sometimes conflict, like improving customer service versus reducing inventory levels. Inventory control is also complex due to its many functions within a company.
Inventory analysis involves examining inventory levels to determine the optimal amount to keep on hand, balancing ordering and holding costs. It requires considering additional factors like production strategies, financing availability, and market demands. Inventory control aims to determine and maintain optimal investment in inventory given associated benefits and costs. It relates to policies that determine what materials a company will stock and in what quantities. Benefits of inventory analysis include procuring materials efficiently, preventing production delays, reducing excess inventory investment, and lowering losses. Demerits are that business risks can't be fully eliminated and inventory objectives sometimes conflict, like improving customer service versus reducing inventory levels. Inventory control is also complex due to its many functions within a company.
Inventory analysis involves examining inventory levels to determine the optimal amount to keep on hand, balancing ordering and holding costs. It requires considering additional factors like production strategies, financing availability, and market demands. Inventory control aims to determine and maintain optimal investment in inventory given associated benefits and costs. It relates to policies that determine what materials a company will stock and in what quantities. Benefits of inventory analysis include procuring materials efficiently, preventing production delays, reducing excess inventory investment, and lowering losses. Demerits are that business risks can't be fully eliminated and inventory objectives sometimes conflict, like improving customer service versus reducing inventory levels. Inventory control is also complex due to its many functions within a company.
Inventory analysis involves examining inventory levels to determine the optimal amount to keep on hand, balancing ordering and holding costs. It requires considering additional factors like production strategies, financing availability, and market demands. Inventory control aims to determine and maintain optimal investment in inventory given associated benefits and costs. It relates to policies that determine what materials a company will stock and in what quantities. Benefits of inventory analysis include procuring materials efficiently, preventing production delays, reducing excess inventory investment, and lowering losses. Demerits are that business risks can't be fully eliminated and inventory objectives sometimes conflict, like improving customer service versus reducing inventory levels. Inventory control is also complex due to its many functions within a company.
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 2
INTRODUCTION:
Meaning:
Inventory analysis is the examination of inventory to determine the
optimum amount to keep on hand. Traditionally, this has been done by balancing the costs of ordering and holding inventory (known as the economic order quantity). However, considerably more inventory analysis must be conducted to account for additional factors, including Just-in-time ordering, Order fulfillment philosophy, Inventory obsolescence, Cash availability.
In short, inventory analysis involves more than the use of a single calculation to determine inventory levels. Instead, a number of factors involving company strategy, production systems, financing, and the requirements of the marketplace must all be examined to arrive at the optimal inventory level.
Definitions:
Inventory control can be defined as “Determining and maintaining
optimum investment in inventory given the significance of benefits and cost association with holding inventory ”.
Inventory Control relates to “ a set of policies and procedure by which an
industries determines which materials it will hold in stock and the quality of each that it will carry in stock “. Therefore inventory control is otherwise known as STOCK CONTROL.
Merits of inventory analysis and techniques:
It enables the material to be procured in economic quantities.
It eliminates delays in production caused by the non-availability of required materials. It works as a check on the over accumulation of inventories and thereby results in minimum investment consistent with production requirements. It reduces inventory losses caused by inadequate inspection of incoming materials and losses due to obsolescence, deterioration, waste and theft while in storage. It ensures proper execution of policies covering procurement and use of materials. It also facilitates timely adjustment with changing conditions in the market
Demerits of inventory analysis and techniques:
(i) Efficient inventory control methods can reduce but cannot eliminate business risk.
(ii) The objectives of better sales through improved service to customer;
reduction in inventories to reduce size of investment and reducing cost of production by smoother production operations are conflicting with each other.
(iii) The control of inventories is complex because of the many functions it
performs. It should be viewed as shared responsibilities.
