Category: Material

ABC (Always Better Control) analysis is an important tool used in material control. As we all know that a variety of parts and materials are used in manufacturing each and every industrial product. And efficient material management calls for a selective control over all the items of inventory. Since every item of material is not equally important for controlling point of view, some expensive or critical items require more control as compared to relatively cheaper and less important items. Hence there arises a need for an analysis of these items…

One important question before the materials department, when placing an order before the supplier,  is to select an optimum order size  which is also called economic order quantity. Economic order quantity(EOQ) is the optimum ordering quantity i.e. the quantity for which cost of holding plus the cost of purchasing is the minimum. The factors that affect EOQ are material carrying charges and the ordering cost associated with placing the order. The basic aim behind setting of EOQ is to minimise both the costs. The material carrying costs include interest on the…

Determination of various levels of  inventory is one of the prime responsibility of Materials Department. The purpose behind setting of different stock levels is to ensure smooth operation of the enterprise and allocation of appropriate amount of monetary resources to different items in the inventory. A number of factors affect the determination of  stock levels for different items. Some of these are: Rate of consumption Lead time Storage /warehousing /carrying costs Insurance cost Seasonal considerations Price fluctuations Economic Order Quantity (EOQ) Quality of raw material Availability of space Availability of funds…