Inventory control refers to the management function concerned with the acquisition, storage, handling and usage of inventory so as to ensure the availability of inventory when needed, provide adequate cushion for contingencies and deriving maximum economic benefits and at the same time minimizing wastage and loses. http://gistareaventures.com
Independently, inventory control can be defined as a quantity of goods or materials in the control of an enterprise and held for a time his relatively idle or unproductive state, awaiting its intended use or sale. It is equally identified as stock on hand at a given time.
The type of inventory items consumed in the normal functioning of an organization that are not a part of the final product. They include toiletries and pencils:
- Raw materials – Inputs into the production –process that will be modified or transformed into finished goods.
- In process goods – Partially completed final product that are still in the production process
- Finished goods – Final products available
for sale, distribution or storage, more over, in the administration of the
inventory of an organization the following question should always be
- What is the optimum amount of inventory to carry?
- What is the economic tool size for an order?
- What is the record system for showing the status or inventory at hand?
Control is necessary so as to minimize cost and at the same time keep our services good enough so that we do not lose business. But the control and maintenance of inventory is a problem that is common to organizations in different sectors of the company. Inventory problem have proliferated as technological progress has increased the organization ability to produce goods in a greater quantity and at a faster rate. Cash invested in inventories could be used some where else for profit making, debt servicing or dividend distribution. Management is therefore becoming increasingly aware that the overall efficiency of company’s operation is directly related to inventory situation existing within the company. The real problem therefore has been in the determination of the inventory level at which money invested in inventory will produce a rate of return higher than it would had been invested in some other areas of the business.
It must not be overlooked that some problems associated with inventory management are created by lack of effective and efficient inventory management arising mainly from the management inability to identify the proper inventory control strategy to be adopted, or even where identified, the application is often inadequate.