MBA Programme Inventory Management INTRODUCTION The Inventory Concept The dictionary meaning of the word inventory is “Stock of goods”. The term ‘Inventory’ refers to the commodities s!!"ied to an ndertaking for the !r!ose of consm!tion in the !rocess of manfactre or of rendering service or for transformation into !rodcts. To the finance e#ective$ ‘Inventory’ can %e taken as the va"e of raw materia"s$ cons ma %"es $ s!ar es$ wor k in !rogres s and fini shed goods in whi ch the com!any ’s working ca!ita" fnds have %een invested. Classification of Inventories The Inventories in an Indstria" concern is genera""y c"assified as fo""owing& • Raw mat erial In ven tor y - This is sed in manfactring. 'hen the demand arises$ they are drawn from stores and !rocessed or se va"e is added dring the !rocess and fina""y finished !rodct co mes ot. • Semi finished goods - 'hen the materia" %eing !rocessed$ it may have to wait %etween two !rocesses$ sch materia" are known as semi finished goods or semi finished materia" or 'ork in !rocess inventory. • Components - The !arts sed in assem%"y of !rodct$ are known as com!onents. 'hen these com!onents are !rchased from otside$ it is known as %oght ot com!onents or %oght ot materia". • Spare parts Inventory - 'hen manfactring or servicing faci"ity %reakdown$ it is to %e re!aired. In sch case$ the defective or worn(ot !arts of the machine are to %e re!"aced %y new one. These new !arts of the machine are known as s!ares or s!are !arts. )S* S!inning + 'eaving Mi""s ,P- td.$ / 0I1T

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Inventory Management Ysr

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