Some useful information related with Material Management - Study Material for IPO Examination

Inventory or Material Management

1.  Earlier concept of inventory management is related with physical verification of stock

2.  Modern concept of inventory  is related with total stock of materials (excluding capital Assets)

3.  Inventory can be divided into  raw material, semi finished  goods, finished goods

4.  On the basis of function inventory can be classified  as             Movement inventory , Lot size inventory ,  Fluctuation stocks , Anticipation stock

5   Inventory control  incorporates the  determination of optimum size of inventory

6   Inventory Management includes 1. designing an inventory control organization  with proper accountability 2. Procedures for inventory handling and disposal of scrap 3. simplification and standardization of inventories

6. Inventory management aims to plan  the optimum size of inventors which is neither too much nor too little and available at right time

7 Classification of  Inventory control systems 1. Minimum Level  2 Re order Point 3 . Standard order quantity  4. Maximum Level

8.   The main reasons of  excess inventories poor purchase administration and price decreasing

9 ABC analysis related with material management   .  Meaning  of  ABC  - Always Better Control

10  Main requisites of a well planed inventory systems   1. Proper organization for inventory   2. Standardization  and codification of inventory   3. Perpetual inventory  records are kept   4. complete physical inventory for at least once in a year to locate and correct errors   5. Inventory manual are kept  for ready use

11  There can be two types of stocks , working stocks and safety stocks

12   The time interval between successful replenishment of delivery  of material is known as cycle time

13   Re order  point /Level is that specified amount of inventory at or below which when actual inventory falls, additional material  is procured

14  Classification of Re order control system 1. Fixed order quantity /Two Bin System  2. Fixed order interval or review system 3. Combination of two

15 EOQ means Economic Order quantity

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