Store / Inventory control technique is the important tool in the hands of the

modern management. It is indispensable for each and every manufacturing

concern. The following are the important techniques of store control.

Fixation of various stock level: Under this method various stock levels are fixed
scientifically to avoid over stocking and under stocking of materials. Over stocking of
materials leads to unnecessary blockage of materials and investment and under stocking of
material leads to disputation in production. These are the following stock levels which help
for planning of materials.
Economic ordering quantity: Economic ordering quantity is that quantity of material which
are to be ordered in one time in order to minimize ordering cost, carrying cost as well as cost
of holding stock.
Perpetual inventory system: Perpetual inventory system is defined as a system of records
maintained by the controlling department which reflects the physical movement of stocks and
their current balances.
Bin card and store ledger constitute the bedrock of perpetual inventory system. It is a method
of recording store after every receipt & every issue and their current balances to avoid closing
down the firm for stock taking. To ensure accuracy the physical verification may be made
which must have to agree with the balance of Bin Card & store ledger. If there is any
discrepancy between the two, it may be adjusted by preparing debit note and credit note.
A.B.C. Analysis: A. B. C. analysis is always a better control system. Under this method
inventory items are classified in to three categories such as A. B. C. basing upon its value and
cost significance. The number of items and the value of each class is expressed as percentage
of the total and categorize as under.
Items of high value and small in numbers termed as A
Items of moderate value and moderate in number is termed as B
Items of small in value and large in number is termed as C
Merits:
Provides better control
Acts as an internal check mechanism
Assures minimum of investment at least cost
Timely detection of errors & discrepancies.
Preparation of final accounts at any time is possible.
Demerits: Not suitable for small units
More paper work
Actual stock taking may not be possible in true sense
V.E.D. Analysis: This method is used for control of spare parts. VED is the symbol of

1. Vital spare parts: Are those spares whose cost of stock out is very high.
2. Essential spare parts: Are those spares which are essential for the production to
continue.
3. Desirable spare parts: Are those spares which are needed but their absence even a
week or more will not lead to stoppage of production.
Inventory turn over ratio: Inventory turn over ratio is one of the method of store control. it
indicates how quickly the stocks are converted in to sale. Low inventory turn over ratio
indicates the inefficient management in inventory & high inventory turn over ratio is always
implies favorable situation.
F.S.N Analysis

FSN stands for Fast moving, Slow moving and Non moving items
The classification is based on past consumption pattern
Useful to control obsolescence of raw materials, components, tools and spare
parts
The HML classification is similar to the ABC classification, except for the fact that
instead of consumption values of items, their units values are considered. Items
are classified on the basis of their unit value into:
H= High value items
M= Medium value items
L=Low value items

Purpose
Just in time inventory is intended to avoid situations in which inventory exceeds demand and
places increased burden on your business to manage the extra inventory. Manufacturers using
JIT processes want to use materials for production at levels that meet distributor or retailer
demand but not in excess. Retailers only want to acquire and carry inventory that meets
immediate customer demand. Excess inventory requires storage and management costs.