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employees are provided with performance, would be in a position to correct their weaknesse5their strengths, which in turn would help, employees’ productivity., , and improy, to impros, , , , Inventory is a stock of items such as materials, components, Ws, in-progress, and finished goods held at a specific location ata spew, period of time for the purpose of production and for supply in#, market., , Inventory management is a process of planning, organisiy, directing and controlling the quality and quantity of inven, appropriate level, so that the production and distribution takes, effectively. ~, , Inventory management is concerned with:, , Planning of the quality and quantity of inventory, , Purchasing of inventory items at the right time, of the ris, quality and quantity and at the right price.

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') Production Planning and Inventory Management 37, , e Provision of appropriate storage facilities at the right location., , } @ Determining appropriate requisition procedures., , Objectives of Inventory Management, , , , , , inventory blocks working capital, and also increases overheads, | relating to warehousing. The longer the item remains in the, _ warehouse, there are chances that the product may get damaged or, stolen, and at times, the product may get obsolete. Under-stocking, of inventory of materials can affect the production cycle, and thus, creates the problem of losing customers., , ‘al, , “OV, oy. Anefficient inventory control system tracks how much the products, _ are in stock and forecasts how long the supplies will last based on, _ sales activity. Inventory control, thus, enables a firm to place orders, _» for the right level of materials to ensure smooth flow of production,, 3§ and to deliver on time in the market., , The main objectives of inventory management are as follows:, on, cif 1. To Plan for Right Inventory Level:, ith Inventory management aims at the right level of inventory in, ' terms of quality and quantity. Planning of inventory in advance, i enables the company to purchase the inventory from the right, inh source at the right price and at the right time. Planning of, ry 4 inventory avoids last minute arrangement for inventory, which, sl is often obtained at higher costs., , 2. To Organise Inventory:, , Proper Inventory management enables the firm to organise the, , inventory. The company can place the orders with the right, , | source for the right inventory. Proper arrangement of inventory, , rig _ (materials and components) enables a firm to produce the right, quantity and quality of goods., , bE

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se, , mmer oiml.‘ommerce IV (5.Y-B. 1, , : tions:, To Ensure Continuity of Production Opera anitiit, , Scientific inventory management |, production of goods. Effective production ea), the problem of shortages. It ensures proper supp" ae, required for production, which in turn facilitates $ i, of production operations. Asa result, the company can a, the right quantity and quality of goods at the right time., , To Deliver Goods on Time:, , Proper inventory management of materials helps t, production on time. Therefore, the company can adher, delivery schedules in the market. Also sufficient inventor, finished products helps to match the customers’ requireme, Thus, inventory management can provide better service to, customers by delivering the products at the right tim, demanded by the customers., , o under!, , To Protect against Fluctuations in Demand:, , Generally, the demand forecast for any product is not accu!, There is possibility of some difference, and at times a gre, difference in estimated demand and actual demand for, product. If sufficient items are available in the inventory,", fluctuations in demand can be easily adjusted and, , organization can protect itself from economic losses on ace?, , of loss of customers., , To Protect against Fluctuation in Output:, , An important function of inventory management is 7 i, the gap between actual and scheduled production. be, cases where production schedule cannot be adherec :, reasons like sudden breakdown of machines, problems eee, of materials, sudden labour strike, etc. In such on, difference in actual production and the scheduled (P, production can be bridged by inventories., , To Make Effective Use of Working Capital: fective, ment helps as maint!, nents, ef, , Proper inventory manage al, working capital. Inventory managenien ae, the right amount of stocks of materials, comP

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To Reduce Production Costs:, , Inventory management facilitates cost reduction and cost, control. Due to effective inventory management, a firm, maintains the right level of inventory. The cost of maintaining, excessive stocks in the warehouse is avoided. For instance, the, expenses relating to dusting, cleaning, and handling excess, stock of inventory is reduced. Also, the company can make best, use of floor space in the warehouse., , 8., 9. To Reduce Risk of Obsolescence:, , Inventory management helps to reduce risk of loss on account, of obsolescence or deterioration of items. Proper inventory, management helps to maintain the right stocks. Through, periodic checks, it is possible to weed out obsolete and nonmoving items. The non-moving stock can be disposed off with, a deep discount., , 10. To Reduce Administrative Work-load:, , Proper inventory management helps to reduce administrative, work load in respect of purchasing, inspection, store-keeping,, etc. This in turn reduces manpower requirements, and, consequently costs of administration relating to inventory, management., , 11. To Monitor Loss of Materials:, , » Production Planning and Inventory Management 39, stocking of inventory is avoided. Therefore, the working capital, is not blocked in excess inventory., , t, , i, , t, , ', , i Inventory management helps to maintain a check against loss, of materials through carelessness or pilferage. If there is no, proper inventory management, then there are more chances of, f carelessness and pilferage on the part of the employees,, E especially, in the store-keeping section., , 1, , i, , 12. To Facilitate Cost Accounting Activities:, , Inventory management facilitates cost accounting activities., This is possible because inventory management provides a, means for allocating material costs to products, departments, or operating units., , Bo err cri, , I

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SRT,, , ; ee Commerce - Vs, , 13. To Eliminate Duplication in ¥B.Com,, Generally, firms maintain ce, , y, prod, , Ordering:, , areca, , f ntralised inve, , b system with reference to ordering of aatéHials 2 aN age, , ' a Parts. Therefore, the centralised invento <n nen, \, t eliminates duplication in ordering or in replenj hig oh :, f This results in not only effective management an o im, , : inventory but also control Over costs, " CON, _—, Ee 14. To Gain Competitive Advantage: A, fie A firm can gain competitive advanta, , 7 : ], \ i 8e in the market a, right level of Inventory. Inventory management eng ae, , : availability of right quality of materials. As a Tesullt, a firm w,, F be in a position to produce and deliver quality products, market. Also, the inventory management facilitates cost coy :, and therefore, a company would be ina position to charge, , right prices. Thus, quality goods at the right Prices ;, competitive edge in the market., , Ures, , Techniques of Inventory Control, , , , , , There are several techniques of inventory control. Some of:, commonly used techniques are as follows:, , 1. The ABC Classification:, , ABC technique is often referred to as ‘Always Better Conti, This technique advocates a selective approach to invent, control. It focuses on inventory control of those items wh 3, account for the bulk of annual usage value., , This technique classifies inventories into three broad categon., A, B, and C., © Category A items are most important items, and are ofti i, _. value. Therefore, tight control over the inventory, required., , , , Category B items are of moderate importance and vall, zi te control i ; i