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1. Organizational Factors:
These are certain factors, which are related
to policies, traditions and environment of org.
1. Organizational structure.
2. Amount of capital available for stock.
3. Rate of return on capital on the opportunity
cost.
4. Storage and warehousing policies.
Factors Affecting.
1. Other factors.
These are related to overall environment of
organizations in the specific region.
1. Inflation.
2. Strike situations.
3. Wars, or some other natural calamities like
floods, earthquakes, etc.
4. Differences between input and output.
Types of inventory analysis.
Different organizations follow different
inventory analysis or inventory control
system. Some of them are;
2. ABC analysis.
3. HML
4. VED
5. SDE
6. FSN.
ABC Analysis.
ABC (Always Better Control)
It is based on the concept, “Thick on the best
and Thin on the Rest.”
The objective of ABC control is to vary the
expenses associated with maintaining
appropriate control according to the potential
savings associated with a proper level of such
control.
It is one of the widely used techniques of
inventory control.
ABC Analysis.
The ABC approach is a means of categorizing
inventory items into three classes ‘A’ , ‘B’ and ‘C’,
according to the potential amount to be controlled.
For this, annual consumption value is calculated by,
Annual Usage Value
= Annual Requirement X Per Unit Cost.
The items of inventory are then categorized under
Items functionally critical, no matter how little they
cost.
Items important because their usage value is high.
Items having average usage value.
Items having low usage value.
ABC Analysis.
The following procedure is suggested for
developing an ABC analysis:
2. List each item carried in inventory by number
or some other designation.
3. Determine the annual volume of usage and
rupee value of each item.
4. Multiply each item’s annual volume of usage
by its rupee value.
5. Compute each item’s percentage of the total
inventory in terms of annual usage in rupees.
ABC Analysis.
Procedure (CONTD..)
FSN Analysis
Here, classification is based on the
pattern of issues from stores and is
useful in controlling obsolescence.
F = Fast moving
S = Slow Moving;
N = Non Moving.
FSN Classification.
To carry out an FSN analysis, the date of
receipt or the last date of issue, whichever is
later, is taken to determine the number of
months, which have lapsed since the last
transaction.
The items are usually grouped in periods of 12
months.
FSN analysis is helpful in identifying active
items which need to be reviewed regularly and
surplus items which have to be examined
further.
Non-moving items may be examined further
and their disposal can be considered.