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Concept Inventory Control

The document discusses inventory control systems. It describes accounting control as maintaining proper records of inventory receipts and usage. Operating control aims to keep inventory levels optimal for operations and finances. There are two main inventory control systems - periodic where inventory is manually counted periodically, and perpetual which uses technology like barcodes for real-time counts. The periodic system is simpler but error-prone, while perpetual provides accurate up-to-date data but requires more resources.

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Sabir Ali
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51 views6 pages

Concept Inventory Control

The document discusses inventory control systems. It describes accounting control as maintaining proper records of inventory receipts and usage. Operating control aims to keep inventory levels optimal for operations and finances. There are two main inventory control systems - periodic where inventory is manually counted periodically, and perpetual which uses technology like barcodes for real-time counts. The periodic system is simpler but error-prone, while perpetual provides accurate up-to-date data but requires more resources.

Uploaded by

Sabir Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Concept Of Inventory

Control
CONCEPT OF INVENTORY MANAGEMENT

 The term inventory control is used to cover functions which are quite different
and are related to one another only in that they both require the maintenance of
adequate records of inventory as well as receipt and issue corresponding to
these two functions. It is interpreted as accounting control and operating
control.
 Accounting control of inventories is concerned with the proper recording of the
receipt and consumption of the material as well as the flow of goods through the
plant into finished stock and eventually to customers.
 It is also concerned with the safeguarding of the undertaking’s property in the
form of raw materials, work-in-progress and semi-finished product. Operating
control of inventories is concerned with maintaining inventories with the
optimum level keeping in view the operational require­ments and financial
resources of the enterprise.
OBJECTIVES OF INVENTORY CONTROL

As inventory is an essential part of any organisation, it consists of many items


running into thousands. Systematic management and control of inventory for all the
items is a challenging job. Main objectives of inventory control are:
 To maintain the overall investment in inventory at the lowest level, consistent
with operating requirements.
 To supply the product, raw material, sub-assemblies, semi-finished goods, etc. to
its users as per their requirements at right time and at right price.
 To keep inactive, waste, surplus, scrap and obsolete items at the minimum level.
 To minimize holding; replacement and shortage costs of inventories and
maximise the efficiency in production and distribution.
 To treat inventory as investment which is risky. For some items, investment may
lead to higher returns and for others less returns.
TYPES OF INVENTORY CONTROL

THERE ARE TWO TYPES OF INVENTORY CONTROL. THE PERIODIC AND THE
PERPETUAL SYSTEM. CHOOSING THE RIGHT INVENTORY CONTROL SYSTEM WILL
DEPEND ON THE BUSINESS TYPE, SIZE, AND KIND OF INVENTORY.

PERIODIC PERPETUAL
INVENTORY INVENTORY
CONTROL CONTROL
TYPES OF INVENTORY CONTROL
PERIODIC

 The periodic inventory control system pertains to a recurring count of goods at specific
intervals. In this system, warehouse managers manually count their inventory on a
monthly, quarterly, or annual basis. The exact period depends on an organization’s
needs and business activities.
 Pros: It’s relatively simple and easy to manage for smaller inventories. It doesn’t
require any specialized technology and equipment, making it easier to train individuals
in.
 Cons: It becomes a lengthy process for companies with expansive inventories. The
manual counting process is also highly prone to human error.
 Best for: The periodic system is ideal for small companies with minimal inventory. It
also works best for businesses selling niche products and counting larger-sized goods.
TYPES OF INVENTORY CONTROL
PERPETUAL

 The perpetual inventory control system provides an accurate count of inventory levels
in real-time. It utilizes technology, such as barcodes and Radio Frequency Identification
(RFID) tags, for tracking products. The information is then logged in a centralized
database that warehouse managers can easily access.
 Pros: This method removes the need for manual counting. It gives warehouse
managers a snapshot of their inventory counts over a specific period of time. Doing so
drives data-driven decision-making for sales, ordering, and inventory management.
 Cons: An inventory control software can be expensive to maintain. Moreover, it might
not capture discrepancies due to product theft, loss, damage, and scanning errors.
 Best for: The perpetual system works best for companies with multiple locations. It’s
also great for businesses maintaining large inventories.

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