Inventory -Mechanical Engineering
INVENTORY
The ordinary dictionary meaning of inventory is 'a list of goods an estate contains'. Inventory is usually referred to that physical stock of items a business house or an industrial organization keeps in hand for efficient, smooth and uninterrupted functioning.
It may consist of: 1. Raw materials 2. Work-in-progress 3. Maintenance materials 4. Processed and semi-processed materials 5. Oils, fuels and lubricants 6. Finished and semi-finished goods
They may be either in solid, liquid or gaseous form, required for future use, mainly in the production process as in the case of finished goods for re-sale. In any case, it is an idle resource having an economic value awaiting conversion, consumption or re-sale.
THE NEED FOR INVENTORY
Inventories are held primarily for some transaction. 'Today's inventory is tomorrow's production'. In case of production inventory, generally there is a time-lag between the recognition of the need and fulfillment of that need. This time-lag; which is technically called 'lead-time', is due to the time required for ordering, processing and time needed by the vendor for actual delivery of the materials. Consequently, lead-time greatly influences holding of the volume of inventory. Had it been so that materials were readily available right on placing orders, there would have been no need for holding inventory.
INVENTORY CONTROL
Inventory control refers to a planned method of purchasing and storing the materials at the lowest possible cost without affecting the production and distribution schedule.
In simplest language, inventory control may be said to be a planned method whereby investment in inventories held in stock is maintained in such a manner that it ensures proper and smooth flow of materials needed for production operations as 'well sales, while at the same time, the total costs of investment in inventories is kept at a minimum. From the above definition it follows that a
The ordinary dictionary meaning of inventory is 'a list of goods an estate contains'. Inventory is usually referred to that physical stock of items a business house or an industrial organization keeps in hand for efficient, smooth and uninterrupted functioning.
It may consist of: 1. Raw materials 2. Work-in-progress 3. Maintenance materials 4. Processed and semi-processed materials 5. Oils, fuels and lubricants 6. Finished and semi-finished goods
They may be either in solid, liquid or gaseous form, required for future use, mainly in the production process as in the case of finished goods for re-sale. In any case, it is an idle resource having an economic value awaiting conversion, consumption or re-sale.
THE NEED FOR INVENTORY
Inventories are held primarily for some transaction. 'Today's inventory is tomorrow's production'. In case of production inventory, generally there is a time-lag between the recognition of the need and fulfillment of that need. This time-lag; which is technically called 'lead-time', is due to the time required for ordering, processing and time needed by the vendor for actual delivery of the materials. Consequently, lead-time greatly influences holding of the volume of inventory. Had it been so that materials were readily available right on placing orders, there would have been no need for holding inventory.
INVENTORY CONTROL
Inventory control refers to a planned method of purchasing and storing the materials at the lowest possible cost without affecting the production and distribution schedule.
In simplest language, inventory control may be said to be a planned method whereby investment in inventories held in stock is maintained in such a manner that it ensures proper and smooth flow of materials needed for production operations as 'well sales, while at the same time, the total costs of investment in inventories is kept at a minimum. From the above definition it follows that a