Meaning of inventory Inventory includes the categories of

Meaning of inventory �Inventory includes the categories of items: 1) raw material 2)work in progress 3)consumables 4)finished goods 5)spares following

Definition of inventory �“Inventories as intangible property(a) held for sale in the ordinary course of business(b) in the process of production for such sale or(c) to be consumed in the production of goods or services for sale. ” by: - International accounting standard committee

Benefits of holding inventory �There are three main motives of holding inventory: 1)the transaction motive 2)the precautionary motive 3)the speculative motive

Risk and cost of holding inventory �The various costs and risks involved in holding inventories are given as below: 1) Capital costs 2) Storage and handling costs 3) Risk of price decline 4) Risk of obsolescence 5) Risk of deterioration in quality

Inventory control �Inventory control is defined as the “process whereby the investment in materials and parts carried in stock is regulated within predetermined limits sets in accordance with the inventory policy established by management. ”

Objects of inventory management and control �To �To ensure continuous supply avoid understocking and overstocking minimise losses eliminate duplication keep material cost under control maintain investment in inventories ensure perpetual inventory control

Essentials of inventory control �Proper coordination and cooperation �Proper planning of material �System of internal check �Proper scheduling of material �Regular reporting to management �Proper inspection of material �Proper classification and codification