Functions of inventory control, Business Management

1. Ensure Timely Availability of Materials: Inventory control helps is preventing delays due to lack of materials by ensuring regular supply of proper qualities of materials at the right time. So it internal and external factors.

2. Better use of Financial Resources : It minimizes the capital investment in the stock of materials. The decision regarding appropriate size of inventory is significant. An unreasonably big or small inventory is uneconomical to any organization. The decisions regarding size of inventory should be based on sound principle and techniques. This leads to healthy practice of wise spending in inventories.

3. Protecting the Inventory from Losses : A good inventory systems develops a set of policies regarding loss due to improper handling or store of goods and unauthorized removal from stores. Obsolescence and deprecation are kept at minimum possible level.

4. Provides Protection Against the Uncertainties of Demand and supply : Maintenance of specified raw materials general supplies work in process and component parts in sufficient quantities to meet the demand of production. Inventory control system ensures the regular supply of proper quantities of materials at the right time.

5. Preparation of Accurate Materials Reports: Inventory control helps in keeping perpetual inventory systems and other records to facilitate the preparation of accurate material reports. Perpetual inventory is a systems of records maintained by the controlling department which reflects the physical movement sof stock and their current balance. It furnishes quickly and accurately the value of materials used in various departments. This facilitates quick decisions and prompts action.

6. Determining of Results : The proper determination of profit depends upon the proper valuation. A major objective of account for inventories is the proper determination of income through the process of matching appropriate costs against revenues. It provides the data on running basis and thus facilitates the preparation of financial statement at shorter intervals.

7. Minimize Wastages and Rate of Deterioration : Inventory control systems also aims at controlling all types of wastages and losses of materials which may arise due to carelessness in the storing issuing and handling of materials .it helps in eliminating wastage in the use of materials by controlling obsolete items and slow moving items costs and losses.

Posted Date: 3/26/2013 2:56:12 AM | Location : United States

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