Explain always better control analysis of inventory control, Operation Management

Assignment Help:

Explain Always Better Control analysis of inventory control.

ABC Analysis of Inventory Control: ABC analysis is the extensively used approach for classifying the inventories on the basis of cost and utilize. It is a type of pareto analysis and sometimes also termed as Always Better Control approach.

The inventories are classified in three groups:

(i) A-Type Inventory: It consists as high value, low volume type of inventories. It means that their yearly consumption is very less although these are very costly items. Despite required less in volume, their yearly monetary value is rather high, as these are very expensive items. ABC-analysis recommends careful control of A-Type inventory. For more periodic review is required.

Involvement of management of higher level is recommended in the review process. A small reduction in the safety stock and EOQ will reason substantial saving for the organisation. This has been observed that a small percentage of items as 10 to 20 percent accounts for major percentage as 70 to 80 percent of the total annual monetary consumption in inventories. These are termed as A-Type inventories.

(ii) C-Type Inventory: Majority of the items (as 60-70 percent) constitute only a minor fraction of the total annual monetary consumption (as 5 to 15 percent) in inventories. All such items are C-Type items. The control required for these items may not be extremely stringent. Bulk-purchase decisions may be helpful as the item cost is less. Hence, lesser number of orders may be placed. All such items may be under the supervision of lower level of management and monthly reports or only exceptional reports are needed by top management.

(iii) B-Type Inventory: Items but A and C type constitute 20 to30 percent in terms of items and 10 to 25 percent in terms of their annual consumption value. These are known as B-Type inventories. Their supervisions and control are moderate as compared to A or C type inventories.


Related Discussions:- Explain always better control analysis of inventory control

Explain what is the workstation cycle time, 1. Some tasks and the order in ...

1. Some tasks and the order in which they must be performed according to their assembly requirements. These are to be combined into workstations to create an assembly line. The

Compute total amount spent organize your list by room, Can someone help me ...

Can someone help me with this budget? You are given a budget of 10,000 to furnish and decorate you off campus apt. You have chosen global theme your job is to find items from a

Procedure of production control, Procedure of Production Control 1. C...

Procedure of Production Control 1. Control  of activities : It  involves  the  release of manufacturing  orders, setting  plans  in motion  at assigned times  by means of  d

Explain gender differences on the reading scores, You are in charge of a pr...

You are in charge of a project that is investigating the effects of gender differences on the reading scores of first, third, and fifth grades in three different school districts.

Operating budget, The copy center in the College of Business at State Unive...

The copy center in the College of Business at State University has become an increasingly contentious item among the college administration. Department heads have complained to

MBA-2, What do you understand by line balancing what happens if balance doe...

What do you understand by line balancing what happens if balance doesn''t exist

Explain all types of worker's participation, Explain all types of worker's ...

Explain all types of worker's participation. Types of Worker's Participation - Worker's participation in management may take several forms, for example:   (a) Formal partici

Calculate first''s rop, First printing has contracts with legal firms in Sa...

First printing has contracts with legal firms in San Francisco to copy their court documents. Daily demand is almost constant at 12,500 pages of documents. The lead time for paper

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd