Inventory mangement is a crucial things in every organisation. It will decide the working capital requirment and profit of a firm. If the excess stock we kept, there have huge investment and product damages etc.. if the low stock we kept, that may leads to stopage of production, customer missing and sales missing also.
For proper inventory planing, we must beunderstand its future demand in market and lead time also.
We can plan the inventory like this.
1- Under stand its lead time and make forecast on sales.(on the basis of lead time, there must be a no of month forcast, ie if our lead time is 2 month, we must take 4 month forecasted sales quantity.)
2- Current stock possition at factory and godown
3- Expected and on the way items details and when it come to godown as month wise (a)- Arrival for Month First, which is available to that month, (b)-Arrival for month last, which is not available to current month, available to next month. (c)-Arrival for next month first, which is available to next month (d)-Arrival for next month last, which is not available for next month, available for 3rd month.
example:-
if Product A we have 500 qty as stock. Forcasted Sales 4 months 300,350,400,350. and expect on current month 1st - 150 only and lead time is two month (shipping time 15days)
we must plan like this, available sale as per available qty like = 300,350,
for the 3rd month we must order this month first, and give order of 4th month in next month (if we need to pay advance to the purchase order (order cost)).
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