inventory includes: -stock of raw materials -stock of work in progress -stock of finished goods...
TRANSCRIPT
Inventory includes:
-stock of raw materials
-stock of work in progress
-stock of finished goods
-stock of spares
Firm should go for fresh purchase of requisition of material
REORDERING LEVEL Maximum Consumption X Maximum Reorder Period
Minimum amount of materials in hand to facilitate the flow of production process.
MINIMUM LEVEL Reorder level-(Normal level consumption X Normal Reorder period)
Firms holds maximum quantity of materials as stock during the process.
MAXIMUM LEVEL Reorder level+ Reorder Qty.
- (Minimum Consumption X Minimum
Reorder Period)
At this level, the firm should not further issue any materials to the various functional departments.
DANGER LEVEL Average Consumption X Maximum Reorder PeriodAverage Consumption=(Min. Consumption level+ Max.
Consumption level)/2
EOQ is the level at which both Ordering & Carrying costs are minimum.
Ordering costs per order decreases with an increase in no. of units in an order.
Carrying costs increases with an increase in no. of units in an order.
Record prepared by the storekeeper at the moment of Issuing and Receiving of materials.
Types1. Two Bin Card System2. Three Bin Card System
Two Bin Card System One bin card should be maintained for
reorder level & minimum level another for maximum stock level.
Three Bin Card System Incorporates the Lead time stock level in
addition to Maximum, Reorder and Minimum Level of the stock
Prepared by Costing Department of the firm.
It records the issues and receipts of materials at par with the Bin Card system
& also the value of materials.
A- Always B- Better C- ControlA- High control for High value goodsB- Moderate control for Lesser value goodsC- Little control for Least value goods