control of material
TRANSCRIPT
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material control
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What is the Purpose of this Picture???
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Materials Controls
Physical Control Investment Control
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Physical Control • Limited Access• Segregation of Duties • Accuracy in Recording
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Material Control
• Order points • Economic Order Quantity (EOQ)
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Only Authorized Personnel should have access to materials storage areas
Physical Control
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Segregation of Duties
• Purchasing • Receiving • Storage • Use• Recording
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Accuracy in Recording
• An effective materials control system requires the accurate recording of the purchase and issuance of materials
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Controlling the investment in Materials
• Order Point • Economic order Quantity
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Order Point
The Point at which an item should be ordered called the order point
• Usage: the anticipated rate at which the material will be used.
• Lead Time: the estimated time interval between the placement of an order and the receipt of the material
• Safety Stock: the estimated minimum level of inventory needed to protect against stock outs
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Example
• Daily Usage 100 kg• Lead Time 5 Days • Safety Stock 1000 kg • Order Point…………………… (1500 kg )
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Economic Order Quantity
• The order quantity (EOQ) is the quantity of inventory that minimize the cost of inventory management.
• The most important categories of inventory costs are ordering costs and carrying cost.
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EOQ
2* Cost of order* numbers of units required annually• Carrying cost per units
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Thank you