Materials Management - Abc Analysis Indicates Selective Control of Inventories Discuss

In: Other Topics

Submitted By casestudyhelp365
Words 434
Pages 2
Need Answer Sheet of this Question paper, contact aravind.banakar@gmail.com www.mbacasestudyanswers.com
ARAVIND – 09901366442 – 09902787224

MATERIALS MANAGEMENT

1. What do you understand from integrated materials management? What are the obstacles encountered to make this approach effective?

2. Name the industry and the products for which materials requirement planning technique would be suitable than economic order quantities and explain why?

3. What do you understand from Materials Requirement Planning (MRP)? What are its advantages over conventional tools of inventory planning? Which types of industries have use of this technique ?

4. Why should purchase department participate in product development ? Explain to what extent it is practiced in Indian Industry ?

5. Describe the procedure to be followed for the purchase of an item until payment of the bill. Indicate the controls involved.

6. What are blanket orders ? What are their salient features ? For what type of items is this method of buying suitable ?

7. How will you organize buying of seasonal commodities? Explain giving examples ?

8. How does “Buying under risk” differ from “Buying under uncertainty” ? Give a comparative analysis of the two methods ?

9. What are the responsibilities of receiving stores ? What are the different types of materials received in the organization ?

10. What is pallet ? What are the different types of pallets used in the industry? Describe in brief the advantages of palletisation ?

11. Define logistics management. Explain briefly the benefits that can accrue to the organization from the successful implementation of the concept ?

12. How does an effective system of electronic data processing help in materials management?

13. What do you understand from classification of materials ? why is it done ?

In what…...

Similar Documents

Inventory Control Management

...are in transformation from manual inventory system to automated inventory system, including small businesses. Automated Inventory systems can reduce costs, retain the existing customers and gain profits. It can replace the time consuming manual process by providing more accurate data. Every business should have a proper inventory system in order to track whether the store is running out of the stock of an important item or there are some items that are obsolete. Nowadays, automated system is used almost by all the retailers, grocery stores and manufacturing companies. A good inventory control system will alert the retailer when it is time to reorder (www.barcodesinc.com). Automated inventory system will keep the competitive advantage of your company and increase the value of your business. This plan will describe all the necessary equipment required for a low-cost automated inventory system for a small clothing store. It will also explain the costs involved in creation of the system and describe the ongoing maintenance that will be required for the smooth running of the system and provide a workflow diagram of how the system will work. The equipments required to install a low-cost automated inventory system in small clothing store consists of a computer- desktop or laptop whichever is more cheaper, system requirements that can handle and store the inventory system, backup/recovery/portable hard disk and archive device, wireless router, inventory software, mobile scanning......

Words: 1028 - Pages: 5

Inventory Control

...TOPICS COVERED IN THIS CHAPTER : 13.1.0 Definition Of Inventory : 13.2.0 Various Costs Related To Inventory Management : 13.3.0 Inventory Management - Constrains & Problems : 13.4.0 Economic Order Quantity : 13.5.0 Measuring Efficiency Of Inventory Management : 13.6.0 Inventory Control : DETAILS OF TOPICS COVERED IN THIS CHAPTER ARE AS FOLLOWS : 13.1.0 Definition Of Inventory : The Dictionary meaning of Inventory is 'a list of goods'. In a wider sense, inventory can be defined as an idle resource which has an economic value. It is however, commonly used to indicate various items of stores kept in stock in order to meet future demands. * In any organization, there may be following four types of inventory: (a) Raw materials & parts-- These may include all raw materials, components and assemblies used in the manufacture of a product; (b) Consumables & Spares -- These may include materials required for maintenance and day-to-day operation; (c) Work in progress -- These are items under various stages of production not yet converted as finished goods; (d) Finished Products -- Finished goods not yet sold or put into use. 13.1.1 Need For Inventory : Many of the items we need for our day-to-day maintenance and operation are required to be specially manufactured for the Railways. The time to procure these materials, therefore, is longer due to various reasons and it is not possible to procure these materials when instantaneously required. It is,......

Words: 3252 - Pages: 14

Inventory Management and Control

...INVENTORY MANAGEMENT AND CONTROL* INVENTORY MANAGEMENT AND CONTROL concerns most managers of agricultural marketing and supply businesses, whether they are retail, wholesale, or service oriented. The value of a manager to an agricultural marketing and supply business depends on his ability to manage inventories effectively. The total cost of maintaining the desired inventory level must be held down to a reasonable figure, but the inventory must also be large enough to permit the company to effectively merchandise the products and services it sells. If the manager doesn't control his inventories to accomplish both of these objectives, the business may not be able to prosper or even to survive against competition. The information in this circular suggests to the manager ways on how best to do four things: Y How to control inventories. Y How to visualize the inventory costs to be included in determining how much inventories are costing the company. Y How to determine the level of inventory that is most profitable. * Y How to determine how much to order and how often to order. Controlling Inventories Purchase systematically. Place orders for materials long enough beforehand so there will not be a shortage between ordering and delivery. Let the inventory become relatively low before reordering but keep enough on hand to meet current needs. There are costs associated with keeping large inventories. Likewise, there are costs if you deplete your stock. Don't hold “dead”......

Words: 3513 - Pages: 15

Abc Analysis

...ABC ANALYSIS In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method aims to draw managers’ attention on the critical few (A-items) and not on the trivial many (C-items). The ABC approach states that, when reviewing inventory, a company should rate items from A to C, basing its ratings on the following rules: A-items are goods which annual consumption value is the highest. The top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items. C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the annual consumption value typically accounts for 50% of total inventory items. B-items are the interclass items, with a medium consumption value. Those 15-25% of annual consumption value typically accounts for 30% of total inventory items. The annual consumption value is calculated with the formula: (Annual demand) x (item cost per unit). Through this categorization, the supply manager can identify inventory hot spots, and separate them from the rest of the items, especially those that are numerous but not that profitable. Important Points on “ABC” Analysis * Whenever the items can be substituted for each other they should preferably be considered as one item. * More emphasis should......

Words: 665 - Pages: 3

Material Management

...MATERIALS MANAGEMENT Importance of materials management :- 1. Materials input is very important as excess material as inventory causes costs to the company and shortage of material results into stoppage of conversion process and subsequently shortage of finished goods leading to customer dissatisfaction 2. Out of 5Ms, that are inputs to a conversion process, material is substantial in terms of its contribution to product cost, and current assets. 3. 51.1% of product cost is on account of materials. Hence the largest contributor to product cost. This marks out materials function as the largest potential avenue for productivity improvement. 4. Materials account for 70% to 80% of working capital. Effective and efficient management of materials can reduce substantial burden on the finances of company. 5. Accounts payable are mostly to materials suppliers. Hence the importance in management of finance of the company. 6. Quality of the Input and product quality: When the companies become leaner and leaner, it is crucial that inputs should remain in the plant only as long as the Through Put Time demands, and the output product should be Right First Time. The quality of inputs plays a vital role in this situation. 7. Management of materials is crucial in a Just In Time company. Production process needs very strong materials management support to gear up to face challenges of current market 8. Materials management provides information about availability of......

Words: 3992 - Pages: 16

Inventory Control

...Materials Materials are the principle component in production and transform into finished goods. The basic substances used in the process of production and from which a product is made are termed as materials. The term material is fairly comprehensive. It in includes not merely raw materials but work-in-process or semi finished goods, finished goods and consumable stores also because they may use to the process of production. Types of Materials Direct Materials: Materials that became a part of the units produced and incur expenditure, that are easily traced to the units of output and included in the cost goods sold. Example: Timber in cases of furniture making. Indirect Materials: Materials that are not directly associated with production and are part of operating expenses. Example: Bottom in case of shirt making. Material control Material control is a systematic control over the purchasing, storing and using of material to minimize the possible cost. Material control may be defined as the level of material maintenance so as to ensure uninterrupted production and minimizing the investment of funds. Objectives of material control Material controls basically aims at efficient purchases, storage and consumption of materials. The following are the major objectives of material control: ➢ To ensure better quantity of material at right quantity at right time for efficient and uninterrupted production of output. ➢ To maintain the cost of......

Words: 4216 - Pages: 17

Abc Analysis

...ABC analysis (Inventory) In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method aims to draw managers’ attention on the critical few (Aitems) and not on the trivial many (C-items). Prioritization of the management attention Inventory optimization is critical in order to keep costs under control within the supply chain. Yet, in order to get the most from management efforts, it is efficient to focus on items that cost most to the business. The Pareto principle states that 80% of the overall consumption value is based on only 20% of total items. In other words, demand is not evenly distributed between items: top sellers vastly outperform the rest. The ABC approach states that, when reviewing inventory, a company should rate items from A to C, basing its ratings on the following rules:    A-items are goods which annual consumption value is the highest. The top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items. C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the annual consumption value typically accounts for 50% of total inventory items. B-items are the interclass items, with a medium consumption value. Those 15-25% of annual consumption value typically accounts for 30% of total inventory......

Words: 1498 - Pages: 6

Management Inventory in Abc Company

...signifikan pada total asset perusahaan. Maka dari itu, diperlukan pengelolaan persediaan yang tepat dan baik pada setiap perusahaan. Menimbang hal tersebut, kami memutuskan untuk melakukan observasi dan analisis terkait pengelolaan persediaan berupa material yang dilakukan oleh sebuah perusahaan konstruksi yaitu PT.Kaliraya Sari yang selanjutnya akan kita sebut sebagai KRS. 1.2 Rumusan Masalah 1. Bagaimana proses KRS dalam mendapatkan proyek dan mengetahui material apa saja yang harus disediakan? 2. Bagaimana proses pengadaan material? 3. Hal apa yang mendasari jumlah material yang harus dipesan? 4. Bagaimana sistem pengelolaan material yang dilakukan oleh KRS? 5. Apa saja kendala yang dihadapi oleh KRS terkait pengelolaan materialnya? Cara apa saja yang telah dilakukan dan dapat dilakukan untuk menanggulangi kendala tersebut? 1.3 Tujuan 1. Mengetahui proses yang dilalui oleh KRS sehingga mereka dapat mengetahui material apa saja yang harus disediakan 2. Mengetahui sumber pengadaan material dan proses pengadaannya 3. Mengetahui hal yang mendasari pemesanan material 4. Mengetahui lebih dalam terkait sistem pengelolaan material yang dilakukan oleh KRS 5. Mengetahui kendala-kendala apa saja yang dihadapi KRS dalam pengelolaan material dan cara menanggulangi kendala tersebut 1.4 Metode Analisis Makalah ini dibuat dengan melakukan wawancara dengan Manajer Pengadaan dan Persediaan PT. Kaliraya Sari serta dengan mengutip sumber – sumber lain. 1.5 Sistimatika Penulisan......

Words: 3567 - Pages: 15

Review and Analysis of the Inventory Control System

...the inventory control system for XXXXX and describe its purpose, critical aspects and objectives. This report will review its faults and challenges, then describe solutions which will produce measurable results. Purpose of an Inventory Control System The inventory control system is the mechanism within a company that is used for efficient management of the movement and storage of raw material, work in process, finished goods, effective utilization of people and equipment, and the communication of this information within the organization and its customers. The inventory control system provides the vital information needed for managers to make decisions. Critical Aspects and Objectives of an Inventory Control System The main goals of an inventory-control system are distributing product to customers on time and as cost-effectively as possible. With this said, the main objectives of the inventory control system are to avoid back-orders while avoiding excess inventory, provide for the efficient movement of goods, and to maximize profit margins while maintaining sustainable cash flow. Avoiding back-orders: Back-orders are costly. You want to make sure that the company has sufficient stock on hand to deliver to customers when they want the product. A defined replenishment system is critical to maintain inventory at sufficient levels to meet customer demands. Seeing as it costs time and money to promote products and attract customers, it is important to have inventory on......

Words: 1259 - Pages: 6

Inventory Control Models

...Inventory Control Models Quantitative Analysis Inventory is often discussed in such a manner that it seems unimportant, but this couldn’t be any further from the truth. The manner in which an organization controls its inventory can decide its fate. Is it too hard to imagine a store advertising a large three day sale but did not forecast correctly and was exhausted of the sale items within hours of the start of the sale. Customers may feel duped into traveling to the store under false pretenses. Or, imagine huge quantities of Christmas items left in the warehouse days after Christmas. The loss of profits or requirement to sell off the items to make room on the shelves could devastate a small business. Inventory is defined as any stored resource that is used to satisfy a current or future need (Render, 2012). Running a successful retail or wholesale business is all about allocating funds wisely. Organizations need to buy only what is necessary of any one item in order to keep sales going, and prevent stock-outs. The rest of the funds can be used to increase product range, increase marketing or pay debts. Items that sit on the shelf gathering dust for months are no use to anyone - an accurately kept inventory system allows managers to quickly identify slow moving products, put them on special offer and release the cash for higher turnover goods. Some companies rely on raw materials to produce products. A lack of inventory can cause the company to miss expended......

Words: 770 - Pages: 4

Management Control Analysis

...- Part 1 Management control analysis on the “Celebrity Chef Dining” project. By Zsuzsanna Szekrenyi, 12/2013 ZSUZSANNA SZEKRENYI 1. Executive Summary The following document is applying the “Management Control Loop” theory to analyze the introduction of the “Celebrity Dish Dining” program at a five star airline. The aim was to improve brand recognition and help differentiation. The project was considered to be a success, however not everything went as smoothly as it would have been possible if all steps described in the “Management Control Loop” would have been applied. The document is focusing on presenting the executed steps, the expected and resulted outcome, closing the discussion with recommendations for improvements for future projects. Page 2/12 ZSUZSANNA SZEKRENYI Table of Contents 1. Executive Summary..........................................................................................................................2 1. Introduction......................................................................................................................................4 2. Analysis and conclusions..................................................................................................................5 2.1 Stage 1 – Set objectives.............................................................................................................5 2.2 Stage 2 – Plan, identify markers and carry out tasks..................................

Words: 2268 - Pages: 10

Inventory Management

...K. CHIRCHIR 2. JOASH N. MAGETO DPS 302 INVENTORY MANAGEMENT A. COURSE OBJECTIVES At the end of this course you will be able to:- • Comprehend the importance of inventory management in an organisation and gain a broad understanding of how inventory management fits into the broader function of supply chain management. • Explain three broad areas of inventory management, namely; demand forecasting, inventory models and warehousing. • Apply inventory control models in day to day business management. B. COURSE CONTENTS LECTURE 1: INTRODUCTION TO INVENTORY MANAGEMENT 1. Introduction 2. Objectives 3. The Concepts of Inventory and Inventory Management 4. Need for Inventory 5. Importance of Inventory Management 6. Scope of Inventory Management 7. Inventory Costs 8. Summary 9. References LECTURE 2: INVENTORY CONTROL SYSTEMS 2.1 Introduction 2.2 objectives 2.3 Fixed Quantity System 2.31 Advantages 2.32 Disadvantages 2.4 Fixed Time System 2.41 Advantages 2.42 Disadvantages 2.5 Hybrid Systems 2.6 Summary LECTURE 3: DEMAND FORECASTING I 3.1 Introduction 3.2 objectives 3.3 meaning of demand forecasting 3.4 Qualitative Judgmental Techniques 3.31 Delphi Method 3.32 Market Survey 3.33 Historical Analogy 3.5 Quantitative methods 3.51 Causal Methods 3.5.1.1 High-Low Method Advantages Disadvantages 3.5.1.2 Visual Fit Method Advantages Disadvantages 3.5.1.3 Simple Regression Analysis Derivation of the Normal......

Words: 31485 - Pages: 126

Abc Analysis

...ABC Analysis The ABC analysis is a business term used to define an inventory categorization technique often used in materials management. It is also known as Selective Inventory Control. The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls. The ABC analysis suggests that inventories of an organization are not of equal value. [3] Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance. 'A' items are very important for an organization. Because of the high value of these ‘A’ items, frequent value analysis is required. In addition to that, an organization needs to choose an appropriate order pattern (e.g. ‘Just- in- time’) to avoid excess capacity. 'B' items are important, but of course less important, than ‘A’ items and more important than ‘C’ items. Therefore ‘B’ items are intergroup items. 'C' items are marginally important. ABC analysis on household items are given below : SL No | Item Name | Monthly Demand | Item Price (Tk)/Unit | Total Cost (Tk) | % of Total Tk Vol | % of M. Demand | Category | 1 | Rice | 40 | 55 | 2200 | 9.393 | 20.833 | A | 2 | Oil | 20 | 120 | 2400 | 10.247 | 10.417 | A | 3 | Salt | 2 | 22 | 44 | 0.188 | 1.042 | B | 4 | Daal | 3 | 90 | 270 | 1.153 |......

Words: 627 - Pages: 3

Abc Analysis

...Telefon: 0203 379-2785 Telefax: 0203 379-3048 eMail: bernd.noche@uni-due.de Prof. Dr.-Ing. Bernd Noche ABC-/XYZ Analysis Introduction tul Quelle: Powerpoint-Folien: Uta Horstmann ABC-Analysis 2 M0000 A short definition of ABC-Analysis The ABC-Analysis represents a simple method of material classification in respect of value and quantity. (G. Wöhe) Expressed in a more general way it is a process in order to identfy important kinds of customers, suppliers or articles. 3 ABC-Analysis M0000 The Pareto principle The so called Pareto principle indicates that for many phenomenons the following is valid: 80 % of effects are reached by 20 % of causes. The principle traces back to Vilfredo Pareto (Italian economist) who, related to Italy, had noticed that 80 % of property belonged to 20 % of the Italian population. Vilfredo Federico Damaso Pareto 1848 - 1923 4 ABC-Analysis M0000 However, the rule often is misunderstood: It seems that 80 % + 20 % = 100 %. But it can also be valid that: 80 % of effects are traced back to 10 % of causes. The principle can also be applied recursively, and not only used for 20% of the reasons : e.g. 64-4 Rule: 96-36 Rule: 64-4 Rule: 51,2-0,8 Rule: e. g. (80 – 16) %  (20 – 16)% e. g. (80 + 16) %  (20 + 16)% e. g. from (80•80/100)% - (20•20/100)% e. g. from (80•80•80/10000)% - (20•20•20/10000)% Source: Wikipedia 5 ABC-Analysis M0000 ABC classification Cumulated Value percentage 100 or Percentage share 90 of......

Words: 2735 - Pages: 11

Materials Management - Best Buying Results When Annual Procurement Cost Equals Annual Inventory Carrying Cost Discuss

...– 09902787224 MATERIALS MANAGEMENT 1. What do you understand from integrated materials management? What are the obstacles encountered to make this approach effective? 2. Name the industry and the products for which materials requirement planning technique would be suitable than economic order quantities and explain why? 3. What do you understand from Materials Requirement Planning (MRP)? What are its advantages over conventional tools of inventory planning? Which types of industries have use of this technique ? 4. Why should purchase department participate in product development ? Explain to what extent it is practiced in Indian Industry ? 5. Describe the procedure to be followed for the purchase of an item until payment of the bill. Indicate the controls involved. 6. What are blanket orders ? What are their salient features ? For what type of items is this method of buying suitable ? 7. How will you organize buying of seasonal commodities? Explain giving examples ? 8. How does “Buying under risk” differ from “Buying under uncertainty” ? Give a comparative analysis of the two methods ? 9. What are the responsibilities of receiving stores ? What are the different types of materials received in the organization ? 10. What is pallet ? What are the different types of pallets used in the industry? Describe in brief the advantages of palletisation ? 11. Define logistics management. Explain briefly the benefits that can......

Words: 434 - Pages: 2