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Rupesh Roshan Singh, Lovely Professional University Unit 11: Inventory Management

Unit 11: Inventory Management Notes

CONTENTS
Objectives
Introduction

11.1 The Role of Inventory in Working Capital
11.1.1 The Purpose of Inventories
11.1.2 Types of Inventory
11.1.3 Inventory under Uncertainty and Safety Stock

11.2 Inventory Management
11.3 Various Techniques of Inventory Management
11.3.1 Setting of Various Stock Levels

11.3.2 ABC Analysis (called Always Better Control)
11.4 Establishment of System of Budget
11.4.1 Use of Perpetual Inventory Records and Continuous Stock Verification
11.4.2 Determining Economic Order Quantity

11.4.3 Review of Stores and Non-moving Items
11.4.4 Use of Control Ratios
11.4.5 Just-in-Time (JIT) System

11.4.6 Material Requirement Planning (MRP) system
11.5 Valuation of Material Issues and Inventory
11.5.1 Management Issues
11.5.2 Valuation of Periodic Inventories

11.5.3 Valuation of Perpetual Inventories
11.6 Comparison of Inventory Valuation Methods
11.6.1 Specific Identification

11.7 Summary
11.8 Keywords
11.9 Review Questions
11.10 Further Readings

Objectives

After studying this unit, you will be able to:
 Recognize the meaning of inventory
 Describe the role of inventory in working capital

LOVELY PROFESSIONAL UNIVERSITY 231