Introduction to material control
Meaning of material
Objectives of Materials Control
1. Continuous Availability of Materials
2. Lowest Cost of Purchase
3. Lowest purchase price
4. Lowest possibility of spoilage
5. No Risk of Obsolescence
6. Least Wastage
Techniques or Methods of Material Control :
1) A.B.C analysis : Contents ;
a. On the basis of importance
b. Division in categories
c. For better management
CATEGORY A
CATEGORY B
CATEGORY C
Classification of material according to value and volume
2) Determination of stock level :
Contents :
a. No under stock
b. No over stock
c. Stock always available at the movement
Re order level
Minimum stock level
Maximum stock level
Average stock level
Danger Level
Usage or Consumption : Types of Usage : Normal Usage, Minimum Usage, Maximum Usage
Formula for calculation of stock levels
3) Economic Order Quantity Analysis
Meaning of E.O.Q
Meaning of ordering cost
Meaning of holding/Carrying cost
4) Perpetual inventory technique
5) V.E.D analysis
6) H.M.L. Analysis Technique
7) F.S.N. Analysis Technique
8) S.D.E. Analysis Technique
9) S-OS Analysis Technique
10) Budgetary Techniques
Issue of Materials
Methods of valuation of material or Methods of pricing material issues
A. At cost price :
i. Real cost method
ii. First in first out method (FIFO) : Advantages or Disadvantages of First In-first out method (FIFO)
iii. Last in first out method (LIFO) : Advantages or Disadvantages of Last In-first out method (LIFO)
iv. Highest in first out of method
v. Minimum in first out method
vi. Base stock method
Bin Card
Stores Ledger Account
B. Average price method
C. Standard price method
D. Replacement cost method
E. Inflated price method
