CONCEPT OF INVENTORY

MANAGEMENT

The term ‘inventory management’ is used in two waystounit control and value control.
Production and purchase officials use this word in term of unit control whereas in accounting this
word is used in term of value control. Investment in inventory represents the one of the largest
asset item of business enterprises particularly those engaged in manufacturing ,wholesale trade
and retail trade.

retail RESEARCH METHODOGY

Research methodology is the way to systematically solve the research problem.

Objective of research study is Analysis of inventory of Jubilant Organosys Ltd. Analyzing of
inventory, we determining following inventories-
1. Raw materials inventory.
2. Work in progress inventory.
3. Finished goods inventory &
4. Supplies inventory.
In this section of inventories, we should analyze the annual investment in inventories, Valuation
of inventory after closing balance of items in inventory. In this manner, we calculate reorder
point, safety stock levels, minimum & maximum levels of inventory.
Working hypothesis of the objective is that inventories are the stock piles of goods .The all
organization on their inventories. JOL invests about 60%of total assets inventory should be
analyzed their records.
The analysis of inventory according to their data available in the company. The data
collection of inventory for analysis by the direct store department. We should record primary and
secondary data by the helps of assistants ledger books M R N etc. We went to the all inventories
as raw material , work in progress inventory, finished goods inventory by the proper observation
of data’s of the company.
INTRODUCTION
Inventories constitute the most significant part of current assets of a large majority of companies
in India. On an average, inventories are approximately 60% of current assets in public limited
companies in India. Because of the large size of inventories maintained by firms, a considerable
amount of feuds is required to be committed to them. It is therefore, absolutely imperative to
ménage inventories efficiently and efficiently in order to avoid unnecessary investment. A firm
neglecting the management of inventories will be jeopardizing its long run profitability and may
fail ultimately. It is possible for fore a company to reduce its levels of inventories to a
considerable degree e.g. 10 to 20 percent, with out any adverse effect on production and sales, by
using simple inventory planning and control techniques. The reduction in excessive inventory
carries a favorable impact on a company’s profitability.

MEANING OF INVENTORY:-
Inventory is the physical stoke of goods maintained in an organization for its smooth sunning. In
accounting language it may mean stock of finished goods only. In a manufacturing concern, it
may includes raw materials, work-in-progress and stores etc. In the form of materials or supplies
to be consumed in the production process or in the rendering of services.
In brief, Inventory is unconsumed or unsold goods purchased or manufactured.

NATURE OF INVENTORIES:-

Inventories are stock of the product a company is manufacturing for sale

and components that make up the product. The various forms in which inventory exist in a
manufacturing company are raw materials, work in progress and finished goods.

RAW MATERIALS:-
Raw materials are those inputs that are converted into finished product though
the manufacturing process. Raw materials inventories are those units which have been purchased
and stored for future productions.

WORK IN PROGRESS:-
These inventories are semi manufactured products. They represent products that
need more work before they become finished products for sales.
FINISHED GOODS:-
Finished goods inventories are those completely manufactured products
which are ready for sale. Stock of raw materials and work in progress facilitate production.
While stock of finished goods is required for smooth marketing operation. Thus, inventories
serve as a link between the production and consumption of goods.
The level of three kinds of inventories for a firm depend on the nature of its business. A
manufacturing firm will have substantially high levels of all three kinds of inventories, while a
retail or wholesale firm will have a very high and no raw material and work in progress
inventories. Within manufacturing firms, there will be differences. Large heavy engineering
Concept OF INVENTORY MANAGEMENT
Inventories constitute the principal item in the working capital of the majority of trading
and industrial companies. In inventory, we include raw materials, finished goods, work-in-
progress, supplies and other accessories. To maintain the continuity in the operations of business
enterprise, a minimum stock of inventory required. However, the physical control of inventory is
the operating responsibility of stores superintendent and financial personnel have nothing to do
about it but the financial control of these inventories in all lines of activity in which they
comprise a substantial part of the current assets is a frequent problem in the management of
working capital. Management of inventory is designed to regulate the volume of investment in
goods on hand, the types of goods carried in stock to meet the needs of production, and sales
while at the same time, the investment in them is to be kept at a reasonable level.

CONCEPT OF INVENTORY MANAGEMENT

The term inventory management is used in two ways- unit control and value control.
Production and purchase officials use this word in term unit control whereas in accounting this
word is used in term of value control. As investment in inventory represents in many cases, one
of the largest asset items of business enterprises particularly those engaged in manufacturing,
wholesale trade and retail trade. Sometimes the cost of material used in production surpasses the
wages and production overheads. Hence, the proper management and control of capital invested
in the inventory should be the prime responsibility of accounting department because resources
invested in inventory are not earning a return for the company. Rather, on the other hand, they
are costing the firm money both in terns of capital costs being incurred and loss of opportunity
income that is being foregone.

Inventory management is the active control program which allows the management of sales,
purchases
and payments.
Inventory management software helps create invoices, purchase orders, receiving lists, payment
receipts and can print bar coded labels. An inventory management software system configured to
your
warehouse, retail or product line will help to create revenue for your company. The Inventory
Management will control operating costs and provide better understanding. We are your source
for inventory management information, inventory management software and tools.
A complete Inventory Management Control system contains the following components:
• Inventory Management Definition
• Inventory Management Terms
• Inventory Management Purposes
• Definition and Objectives for Inventory Management
• Organizational Hierarchy of Inventory Management
• Inventory Management Planning
• Inventory Management Controls for Inventory
• Determining Inventory Management Stock Levels

Inventory is a list forgoods andmaterials, or those goods and materials themselves, held
available in stock by abus ines s. It is also used for a list of the contents of a household and for
a list fortes tamen tary purposes of the possessions of someone who has died. In accounting
inventory is considered anas s et.
Inventory management is primarily about specifying the size and placement of stocked
goods. Inventory management is required at different locations within a facility or within
multiple locations of a supply network to protect the regular and planned course of
production against the random disturbance of running out of materials or goods. The scope of
inventory management also concerns the fine lines between replenishment lead time, carrying
costs of inventory, asset management, inventory forecasting, inventory valuation, inventory
visibility, future inventory price forecasting, physical inventory, available physical space for
inventory, quality management, replenishment, returns and defective goods and demand
forecasting.
Other definitions of inventory management from across the web:
Involves a retailer seeking to acquire and maintain a proper merchandise assortment while
ordering, shipping, handling, and related costs are kept in check.
Systems and processes that identify inventory requirements, set targets, provide
replenishment techniques and report actual and projected inventory status.
Handles all functions related to the tracking and management of material. This would include the
monitoring of material moved into and out of stockroom locations and the reconciling of the
inventory balances. Also may include ABC analysis, lot tracking, cycle counting support etc.
Management of the inventories, with the primary objective of determining.controlling stock
levels within the physical distribution function to balance the need for product availability
against the need for minimizing stock holding and handling costs.

INVENTORY Management

The dictionary meaning of inventory is ‘stock of

goods, or a list of goods’. The work ‘Inventory’ is
understood differently by various authors, in
accounting language it may mean stock of finished
goods only. In a manufacturing concerns, it may
include raw materials, work in process and stores, etc.

MEaNING OF INVENTORY
The meaning of inventory is ‘stock of goods’.In
accounting language it may include:
(a)RAW MATERIAL:They are required to carry out
production acivities uninterruptedly.
(b)WORK-IN-PROGRESS:It is a stage of stocks
between raw material & finished goods.
(c)CONSUMABLES:These are needed to smoothen
the process of production.
(d)FINISHED GOODS:These are the goods which .
are ready for the consumers.
(e)SPARES:Form a part of inventory.

DEFINATION AND MEANING

Inventory is a list of goods and materials, or those goods and

materials themselves, held available in stock by a business.
Inventory are held in order to manage and hide from the
customer the fact that manufacture/supply delay is longer than
delivery delay, and also to ease the effect of imperfections in
the manufacturing process that lower production efficiencies if
production capacity stands idle for lack of materials.