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This web site is designed to help navigate
you through the mountain loads of information about inventory
management.
1. It ensures closer control on costly items in which a large amount of capital has been invested. 2. It helps in developing a scientific method of controlling inventories, Clerical costs are reduced and stock is maintained at optimum level. 3. It helps in achieving the main objective of inventory control at minimum cost. The stock turnover rate can be maintained at comparatively higher level through scientific control of inventories. The system of ABC analysis suffers from a serious limitation. The system analyses the items according to their value and not according to their importance in the production process. It may, therefore, sometimes create difficult problems. For example, an item of inventory may not be very costly and hence it may have been put in category C. However, the item may be very important to the production process because of its scarcity. Such an item as a matter of fact requires the utmost attention of the management though it is not advisable to do so as per the system of ABC analysis. Hence, the system of ABC analysis should not be followed blindly.
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