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limitations of abc analysishowever abc analysis is a basic tool for exercising selective control over many inventory items it does not in its current
advantages of abc analysisthe advantages derived from this analysis and its consequent follow up are summarized below1 facilities selective control
abc analysis pareto analysisin ordinary parlance abc analysis can be best compared with our class society where the population is categorized into
selective inventory managementthe inventory of an industrial firm generally comprises thousands of items with diverse prices usage and lead time as
total inventory costs formula total inventory costs will be as followstotal inventory costs purchase price cost carrying costs stock-out cost
stock-out coststhese are the opportunity costs of running out of stock they comprise1 the costs of lost customer sales and therefore lost
uncertainty of demanddemand is the most troublesome variable to predict accurately actually demand may fluctuate from day to day from week to week or
inventory planning amp control under uncertaintythe basic eoq model assumes that all the parameters elements in the model are certain ie can be
the case of variable quantity discountsin practice suppliers may offer different discounts for different quantities purchased for
the case of a fixed discountwhen evaluating inventory decisions when a fixed discount rate exists the appropriate procedure is to compare the total
eoq model with quantity discountscircumstances frequently occur where firms are able to obtain quantity discounts for large purchase orders buying in
ordering coststhese are incurred in getting purchased items into the companyrsquos inventory or stores and usually consist of clerical costs
the basic eoq modelthis is the most simple of all the models discussed in addition to the general assumptions which relate to all deterministic
choosing order quantity sizemdashproblemthe objective of inventory decisions is usually to minimize total inventory costs to the company costs are
motives for holding inventoriesif production and delivery of goods were instantaneous there would be no need for inventories however in reality the
inventory planning and controlthe main goal of inventory control is to discover and maintain the optimum level of investment in all types of
inventory control decisionsfactories workshops engineering departments handle raw materials used in the manufacture of products the main objectives
material storagesophisticated mathematical models to control economic buying and systems control the flow of material may all be for naught if the
value analysisis a formalized technique involving a rigorous analysis of products at the design stage or at any time during the saleable lives to
material controlit is said that any fool can sellmdashit is buying at the right price that is more critical to the achievement of a satisfactory
inventory controlthe activities of a business during a financial year combine investment projects in progress with new projects commencing and others
joint product decisionswhen a manufacturing company carries out a process operation in which 2 or more joint products are made from a common process
extra shift decisionthese decisions are concerned with whether or not a company should work for 8 hrs 16hrs or 24 hrs a day or week days only or
permanent abandonment of premisesa company may find it more profitable to concentrate its output in some factories by closing down others the
temporary closure of factory or departmenthere there is a similar situation to that of discontinuance of a product such as model n40 a factory which