- Inventory constitutes a significant part of current assets for many companies, often around 60% of current assets. Effective inventory management is important to avoid unnecessary costs and ensure profitability.
- There are different types of inventory including raw materials, work in progress, and finished goods. The objectives of inventory management are to maintain optimal inventory levels for smooth operations while minimizing costs.
- An optimum inventory level balances ordering costs, carrying costs, and stock-out costs. Both over-investment and under-investment in inventory can be dangerous for a company. Effective inventory management tracks inventory levels and determines when and how much to order.
4. Types of Inventory 06/08/09 Work in process Work in process Work in process Finished goods Raw Materials Vendors Customer
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29. Graphical method to find EOQ Cost in RS. Order quantity 0 Ordering cost = DS/Q Carrying cost = CQ/2 Total cost EOQ
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36. Non – Instantaneous replenishment Special inventory model A B C D A B C Thus the inventory is replenished gradually than in lots Particularly in situation were manufacturers use continues production process e.g. FACT makes Ammonium on a continual basis Capacity 10 units
![Inventory Definition ,[object Object],[object Object],06/08/09](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)