Inventoey Control

 Types/Technique of Inventory Control:

There are many techniques of inventory control. These techniques are as below:

1. ABC- The full form of ABC is Always Better Control. Therte are many elements of production. these elements are coal, petroleum, iron ore and so on. The process in which we classify the raw material according to their role, contribution into three categories like A, B, C categories. This process is called ABC method of inventory control. The elememt that is very very important put in A category whereas the element that is less important are put in B category and the element that is very less important is put in C category. So, it is very popular and old method of invrntory control.

Advantage of ABC:

1. It ensure proper supply of raw material in production process.

2. It ensures optimum utilisation of raw matrials.

3. It ensures the balance between source and stock.

4. It ensure maximum production inside organisation.

5. It minimise the problem that may arise in procurement, purchasing and transportation.

2. EOQ- It is the second method of inventory control. The full form of EOQ is Economic Order Quantity. It is the economic base approach. It is developed by Ford.W.Harris in 1913. According to this concept organisation calculates the optimal quantity that can be purchased to monimise the cost. In such type of way that there may balance berween inventory and purchase. This approach is called EOQ. Following is the formula for EOQ model:

Q*= Root under 2DS divided by H.

where Q= optimal oprder quantity

D= unit of annual demmand

S= cost incurred to place a single order or setui.

H= carrying cost per unit.

This formula is derived from the following cost function:

Total cost= Purchase cost + Order cost + Holding cost.

ROP=it is the third method of inventory control. There are two type of condition arises in our organisation. One is slack hour and second is boom hour. The process in which manager find out the average of slck and boom hour and find out an appropriate point to stock raw material. This process is called ReOrder Point. It is also an important method of inventory control. It is used in automobile industry because the demand of product arises according to time, month and so on.