Management In A Manufacturing Company

1.8    Definition of Terms and Concept
There are numerous terms and concepts associated with material and inventory management it is considered most appropriate to define some of these terms and concept.
1.    Inventory Management: This is the part of operation management concerned with discoursing and maintaining the optimum level of inventory investment It is concerned with policymaking on inventing planning and inventory control.
2.    Inventory Control: This involves regulation of quantities of materials or inventory on hand in such away as to ensure the meeting of current needs of the organization while avoiding excess stock the calculation being based on the rate of withdrawals time necessary of replenishment.
3.    Inventory: This lathe stock of any item or resources used in as organization. It includes input such as human equipment, financial and raw material.
4.    Inventory System: These are set of policies and controls that monitors levels of inventory and determines what levels of should be maintained when stock should be replenished and bow large orders should be.
5.    Re order level: This is the quality level that automatically triggers a new order it is the stock Level at which farther replenishment order should be placed.
6.    Maximum stock: This is the most desirable beyond which stock should nut be allowed to rise.
7.    Re order Quantity: This is the replacement order.
8.    Stock out: when are item of stock is required but available then there is a stock out of that item.
9.    Safely stock: An amount of stock in excess of average inventory held in a cushion against a stock out alive to usage or uncertainty of lead time.
10.    Holding/caring Cast: These includes the cost for storage facilities handling insurance, pilferage, obsolescence, depreciation, taxes and the opportunity cost of capital obviously high holding cost tend to favour low inventory and frequent replacement.
11.    Ordering cost: These include certain clerical costs incurred in preparing orders delivery and material handling costs such casts usually represent a fixed amount ft order placed regardless of the quality ordered.
12.     Stock valuation:- This is the method of assigning value to items of stock of a company. ft helps company management to make inventory level decision. They use different method Like Last in first out (LIFO) first in first out (FIFO).