INVENTORY MANAGEMENT

Inventory Management:-

Inventories represent a substantial amount of firm’s current assets. Proper management of Inventory is necessary so that this investment does not become too large, as it would result in blocking capital which could be used in productive aspect in some where else.

Inventory Management covers efficient management of inventories in all its aspects including Inventory planning and programming, Purchasing, Inventory Control, receiving, ware Housing and Store keeping, Inventories handling and Disposal of scrap.

Definition:

“Inventory management is concern with the determination of optimum level of investment for each components of inventory and effective use of components and the operation of components and the operation of an effective control and review of mechanism. The main objectives of inventory management are operational and financial.”

In this context of Inventory Management the firm is faced with the problem of meeting two conflicting needs.

1. To maintain a large size of inventory for efficient and smooth production and sales operations.
2. To maintain a minimum investment in inventories to maximize profitability.

                              The aim of Inventory management, thus, is to avoid excessive and inadequate levels of inventories and to maintain sufficient inventory for the smooth production and sales operations.

An effective inventory management should

1. Ensure continuous supply of materials to facilitate uninterrupted production.
2. Maintain sufficient stocks of raw materials in periods of short supply and anticipate price changes.
3. Maintain sufficient finished goods inventory for smooth sales operations, and efficient customer services.
4. Minimize the earnings cost and time.
5. Control investment in inventories and keep it at an optimum level.