Inventory Control

Inventory Control Function is one of the Four Basic Processes of the Conversion Cycle

Documents (A review of documents that are used in this process)

A three-purpose document

Materials requisition authorizes the storekeeper to release materials (and subassemblies)

to individuals or work centers in the production process. This document usually
specifies only standard quantities.

Materials needed in excess of standard amounts

require separate requisitions that may be identified explicitly as excess materials
requisitions.

In some cases, less than the standard amount of material is used

in production. When this happens, the work centers return the unused materials to the
storeroom accompanied by a materials return ticket.

The inventory control function consists of three main activities which summarizes the
process flow of the inventory control

First, it provides production planning and control with status reports on finished goods and
raw materials inventory.

Second, the inventory control function is continually involved in updating the raw material
inventory records from materials requisitions, excess materials requisitions, and materials
return tickets.

Finally, upon receipt of the work order from the last work center, inventory control records
the completed production by updating the finished goods inventory records.

PROCESS FLOW

1. From the Materials Inventory Records --- it review records– and then provides inventory
status to the production and planning control

2. And then from the storekeeping, it updates inventory records from materials requisition,
material returns and excess materials return ticket

3. Records completed production

OBJECTIVE

An objective of inventory control is to minimize total inventory cost while ensuring

that adequate inventories exist to meet current demand. Inventory models used to achieve
this objective help answer two fundamental questions:
1. When should inventory be purchased?
2. How much inventory should be purchased?

Information Systems that Support Lean Manufacturing

It is an automated production planning and control system used to support inventory
management.

Its operational objectives are to:

-Ensure that adequate raw materials are available to the production process.
-Maintain the lowest possible level of inventory on hand.
-Produce production and purchasing schedules and other information needed to control
production.

Control Procedures or Activities that the Company Might Perform

Segregation of duties over purchases and custody of inventories

Use pre-numbered requisitions, purchase orders, and receiving reports and account for the
sequence of documents.

Establish general ledger control of inventories of raw materials, goods in process, and
finished goods and periodically reconcile to production records.

Establish appropriate physical controls over inventories.