1. INTRODUCTION
The literary meaning of the word inventory is stock of
goods.
Every enterprise needs inventory for smooth running
of its activities
It serves as a link between production and
distribution processes.
The unforeseen fluctuations in demand and supply of
goods necessitate the need for inventory.

2. The investment in inventories constitutes the most
significant part of current assets in most of the
undertakings. Thus it is very essential to have proper
control and mgt of inventory.
The purpose of inventory mgt is to ensure availability of
materials in sufficient qty as and when required and also
minimise investment in inventories.

3. TYPES OF INVENTORIES
RAW MATERIALS
WORK IN PROGRESS
FINISHED GOODS

4. PURPOSE OF HOLDING INVENTORIES
Transaction motive: which facilitates continuous
production and timely execution of sales orders.
Precautionary motive: for meeting unpredictable
changes in demand and supply of materials
Speculative motive: for taking advantage of price
fluctuations , saving in re-ordering costs and qty
discounts etc

5. MAIN OBJECTIVES ARE AS FOLLOWS
To ensure continous supply of materials,spares
and finished goods.
To avoid both over-stocking and under-stocking
of inventory.
To maintain investments in inventroies at the
optimum level as required by the operational and
sales activitites.
To keep material cost under control.
To minimise losses through
deterioration,pilferage,wasteages and damages.

6. Risk and cost associated with inventories
1. Price Decline
2. Product deterioration
3. Obsolescence

7. TOOLS AND TECHNIQUES OF INVENTORY
MANAGEMENT
Determination of stock levels.
Determination of safety stocks.
Determination of Economic Order Quantity.
ABC analysis.
VED analysis.
Inventory turn over ratios.
Age schedule of inventories.
Just in time (JIT) inventory system