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Daily Concept Booster Mechanical Engineering: Inventory Classification and control

Inventory Classification and control

ABC analysis

It is also known as always better control analysis or Pareto law or 80-20 law.
In ABC analysis, the inventory items are classified into A, B and C category depending upon their usage.
For category A, the inventory is kept almost null and frequent review is done on the other hand for C category, the large amount of inventory is kept, and it reviews after longer period.

VED Analysis

It is also known as Vital Essential and Desirable
In this analysis, the inventory items are classified on the basis of importance of inventory for the production system.

HML Analysis

It is also known as High, Medium and Low.
In this analysis, the inventory items are classified on the basis of unit price of inventory.

SDE Analysis

It is also known as Scarce, difficult and Easy
In this analysis, the inventory items are classified on the basis of availability of inventory for the production system.

Inventory Turn Over Ratio (ITR)

 

ITR=(Cost of goods sold)/(Cost of average inventory)
Average days to sell inventory=365/ITR
It is the term use to indicate defectiveness or efficiency of inventory system. This indicates on an average how many times our average inventory is sold out for a particular period.

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Published by VINAYAK KUMAR

Graduated from BIT Sindri, Postgraduated from IIT BHU Varanasi

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