Explain always better control analysis of inventory control, Operation Management

Assignment Help:

Explain Always Better Control analysis of inventory control.

ABC Analysis of Inventory Control: ABC analysis is the extensively used approach for classifying the inventories on the basis of cost and utilize. It is a type of pareto analysis and sometimes also termed as Always Better Control approach.

The inventories are classified in three groups:

(i) A-Type Inventory: It consists as high value, low volume type of inventories. It means that their yearly consumption is very less although these are very costly items. Despite required less in volume, their yearly monetary value is rather high, as these are very expensive items. ABC-analysis recommends careful control of A-Type inventory. For more periodic review is required.

Involvement of management of higher level is recommended in the review process. A small reduction in the safety stock and EOQ will reason substantial saving for the organisation. This has been observed that a small percentage of items as 10 to 20 percent accounts for major percentage as 70 to 80 percent of the total annual monetary consumption in inventories. These are termed as A-Type inventories.

(ii) C-Type Inventory: Majority of the items (as 60-70 percent) constitute only a minor fraction of the total annual monetary consumption (as 5 to 15 percent) in inventories. All such items are C-Type items. The control required for these items may not be extremely stringent. Bulk-purchase decisions may be helpful as the item cost is less. Hence, lesser number of orders may be placed. All such items may be under the supervision of lower level of management and monthly reports or only exceptional reports are needed by top management.

(iii) B-Type Inventory: Items but A and C type constitute 20 to30 percent in terms of items and 10 to 25 percent in terms of their annual consumption value. These are known as B-Type inventories. Their supervisions and control are moderate as compared to A or C type inventories.


Related Discussions:- Explain always better control analysis of inventory control

Integrated solutions in product design, Integrated solutions in product des...

Integrated solutions in product design and control of machinery are based on    CAD and CAM technologies.

Explain about the just in time philosophy, Explain about the just in time p...

Explain about the just in time philosophy. Just in time (JIT): This philosophy requires which products must only be produced when there is an internal/external customer w

Explain motivating employees, What are some effective ways companies are mo...

What are some effective ways companies are motivating employees for (retention and best return). Will rate accordingly. Thanks

Analyzing layouts with computers, Analyzing Layouts with Computers Du...

Analyzing Layouts with Computers Due to the advent of computers and software faculties. Presently computers are used to design the facility layout. Digital computers are wide

Define an aircraft repair facility currently jobs awaiting, An aircraft rep...

An aircraft repair facility currently has four jobs awaiting work. Four teams of mechanics are available. Each team can work on only one of the jobs. Over a period of several month

Solve breakeven problem, Breakeven Problem 1. Avila Manufacturing plans ...

Breakeven Problem 1. Avila Manufacturing plans to increase capacity by adding new equipment. They have received two proposals. Fixed CostVariable Cost/Unit Proposal A $32,

Explain estimate of the dates of the milestones, You are in charge of organ...

You are in charge of organizing a dinner-dance concert for a local charity. You have reserved a hall which will seat 30 couples and have hired a band. Develop a scope statement for

Financial risk, the importance of the measurtement of market risk for finan...

the importance of the measurtement of market risk for financial institution

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd