Inventory control

Essence of control is finding the answers to:

Should a component/item be stocked(necessity)
If yes,when should we order it?(time)
How much should we order?(quantity)
Case study :
We need senorita motor rating stickers costing 10paisa @500per
month . Buyer buys one month stock at a time
We require mild steel sheet metal blade sets costing approx 250per
set . Buyer orders 1000sets
Aura kits are required @1500 nos per day. The buyer has order for
10000 nos.
Aura ruby canopy sets order are placed late.(3000sets)
Only 800nos hs14pole rotor pack has been received and further
receipt not known. A run of 2500 nos 14pole hs fans planned and die
loaded in die casting.
By error m6 has desptched 20,000 rotor packs of 16pole instead of
10000,due to typographic error in fax.
Entire run of 20000 is taken up in die casting section.
Ww1050brn requiremnt is never beyond 300nos per month yet
production executives have planned and produced 800 fans on G1F
ATPP line.
Aura1200ivy dlx fans stock inbsr is 200 FANS on 3rd of the month.
Next production run is planned on 9th of the month.
 Maximum stock level:
Stock levels
The maximum qty of stock that can be held at one time.
c ons um ption per m onth(in nos )1 00
w e buy 300nos every 3 m onths
Max
300
Re-order
150
Min Jan
100 April
On Jan 1st fresh stocks have arrived. On 31st march stock will be zero. On
April 1st 300 items will arrive again.after placing order 45 days are
required to deliver. This means fresh schedule must be given on 15th
feb.
On 15th feb stock of that particular item will be 150 nos.t these 150 nos
will last for 45 days and is called “LEAD TIME CONSUMPTION”.
Stock level 150 nos is referred to as “RE-ORDER LEVEL”.IN THE ABOVE
CASE MAX LEVEL IS 300 AND MIN LEVEL IS ZERO.
 Minimum stock level: is the level of stocks when fresh supply
Is expected to arrive.
In the example cited our division has decided
That we will keep a buffer stock of 100nos.
Then one months consumption is buffer stock.

Max level is 400, min level is 100 and reorder qty is 250.
The max and min concept has a weakness and works well when
Lead time and lead time consumption can be accurately predicted.
Deficiency level:is the level between physical stock/sap stock
And orders in hand.
Exhaust bin level:is the stock out level.
Buffer stock: is the insurance stock to care of exceptional
Conditions.
Danger warning level:is a situation that is a point of no-return
i.e stock out is inevitable if delay occurs.
Re-order level: is the reorder point order
 Methods of controlling stock levels

Perpetual review system

Periodic review system

 Perpetual review system
When the stock level reaches a predetermined level a fixed quantity
Is ordered . This system is more suited for C and low B items
Periodic review system
When the review is done on specific dates say 1st of every month
And one calculates the consumption rate,requirement of fans,stock
Levels,order qty to reach max level.
In perpetual review system the time interval between order will vary
And quantity will be constant In the periodic review system time in-
terval will be constant and quantity will vary.
Imprest stock control:should be adopted for low cost hardware stickers
If too frequent stock out takes place then it is an indicator that max
Level needs adjustment or demand must be looked into or there is
pilferage taking place .
Open access bin:
Two bin system: