Inventory Management (Abc-Xyz-Ved-Fsn)

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Inventory Analysis
Inventory analysis is done at regular intervals to support decision making. Inventory analysis basically helps inventory manager to take necessary steps to protect their valuable items. There are many analysis techniques that are used but some of the important techniques are mentioned here. -          ABC Analysis

-          XYZ Analysis
-          FSN Analysis
-          VED Analysis
ABC Analysis
ABC Analysis helps in the classification of the Items on the basis of their Consumption values in a given period. This analysis in Inventory can be done for specified financial period/s or for a range of dates as specified by the user. Analysis can be done on a selective manner on the basis of the Item types or the Group types. It is possible to do this analysis for a particular Warehouse in a location or for all the Warehouses in the location The consumption value of the items over the specified period for which Analysis is to be done is calculated on the basis of the Receipts, Returns and Adjustments made during that time. The consumption value for items are then put in descending order of their values and the percentage of total consumption value for each item calculated. Usually the first 70% of the total consumption value in the specified period corresponds to A Class, the next 20% are of B Class and the last 10% of the value corresponds to the C Class.             Part # | Consumption Qty | Unit Cost | Cons. Value | Role in Total Cons. In % | Cum. % | Class | Remarks | P3 | 400 | 20 | 8000 | 37.12 | 37.12 | A | up to 70  i.e. from 1 to 70% range | P1 | 300 | 20 | 6000 | 27.84 | 64.97 | A | up to 70 | P6 | 200 | 10 | 2000 | 9.28 | 74.25 | B | up to 20%  i.e. from 70 to 90% range | P8 | 100 | 15 | 1500 | 6.96 | 81.21 | B | up to 20 | P5 | 200 | 5 | 1000 | 4.64 | 85.85 | B | up to 20 | P7 | 200 | 4 | 800 | 3.71 | 89.56 | B | up to 20 |

P2 | 150 | 5 | 750 | 3.48 | 93.04 | C | up to 10  i.e. from 90 to 100% range | P4 | 200 | 3 | 600 | 2.78 | 95.82 | C | up to 10 |
P9 | 250 | 2 | 500 | 2.32 | 98.14 | C | up to 10 |
P10 | 100 | 4 | 400 | 1.86 | 100.00 | C | up to 10 | | | Total Cons. | 21550 | | | | |
Consumption Qty = Issue Qty - Return Qty (+/-) Adjustment
Consumption Value = Consumption Qty x Cost
Cons. : Consumption |
Cum : Cumulative |
XYZ Analysis
XYZ Analysis is always done for the current Stock in Inventory and aims at classifying the items into three classes on the basis of their Inventory values. The current value of the items/variants in the Inventory alone is taken into consideration for the Analysis and it is not possible to do this analysis for any other dates. Generally first 70% of the total Inventory value corresponds to X Class, the next 20% are of Y Class and the last 10% of the value corresponds to the Z Class. XYZ Analysis

Part # | Current Stock | Unit Cost | Stk. Value | Role in Total Stk.In % | Cum. % | Class | Remarks | P3 | 600 | 20 | 12000 | 33.45 | 33.45 | X | up to 70  i.e. from 1 to 70% range | P1 | 450 | 20 | 9000 | 25.09 | 58.54 | X | up to 70 | P6 | 400 | 10 | 4000 | 11.15 | 69.70 | X | up to 70 | P8 | 200 | 15 | 3000 | 8.36 | 78.06 | Y | up to 20  i.e. from 70 to 90% range | P5 | 400 | 5 | 2000 | 5.58 | 83.64 | Y | up to 20 | P7 | 380 | 4 | 1520 | 4.24 | 87.87 | Y | up to 20 | P2 | 300 | 5 | 1500 | 4.18 | 92.05 | Z | up to 10  i.e. from 90 to 100% range | P4 | 350 | 3 | 1050 | 2.93 | 94.98 | Z | up to 10 | P9 | 500 | 2 | 1000 | 2.79 | 97.77 | Z | up to 10 | P10 | 200 | 4 | 800 | 2.23 | 100.00 | Z | up to 10 |  | Total Stock Value : |  | 35870 |  |  |  |  | Stock Value = Current Stock x Unit Cost

Stk. : Stock
Cum : Cumulative
FSN Analysis
FSN Analysis aims at classifying items on the basis of their movement from Inventory. Here the items are...
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