Inventory Management

Inventory Management - Inventory Management How inventory...

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1 Inventory Management þ How inventory items can be classified þ How accurate inventory records can be maintained þ Cycle Counting
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2 ABC Analysis þ Divides inventory into three classes based on annual dollar volume þ Class A - high annual dollar volume þ Class B - medium annual dollar volume þ Class C - low annual dollar volume þ Used to establish policies that focus on the few critical parts and not the many trivial ones
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3 ABC Analysis, an Example Item Stock Number Percent of Number of Items Stocked Annual Volume (units) x Unit Cost = Annual Dollar Volume Percent of Annual Dollar Volume Class #10286 20% 1,000 $ 90.00 $ 90,000 38.8% 72% A #11526 500 154.00 77,000 33.2% A #12760 1,550 17.00 26,350 11.3% B #10867 30% 350 42.86 15,001 6.4% 23% B #10500 1,000 12.50 12,500 5.4% B
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4 ABC Analysis, an Example continue Item Stock Number Percent of Number of Items Stocked Annual Volume (units) x Unit Cost = Annual Dollar Volume Percent of Annual Dollar Volume Class #12572 600 $ 14.17 $ 8,502 3.7% C #14075 2,000 .60 1,200 .5% C #01036 50% 100 8.50 850 .4% 5% C #01307 1,200 .42 504 .2% C #10572 250 .60 150 .1% C
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5 ABC Analysis, an Example Continue A Items B Items C Items Percent of annual dollar usage
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