Design and Implementation of Inventory Management System
Inventory can be defined in several ways as follows as given below:
· Inventory is the stock of physical items such as materials, components, work-in-progress, finished goods, etc., held at a specific location at a specific time.
· Inventory is the merchandise that is purchased and/or produced and stored for eventual sale.
· Inventory is a list of what you have. In company accounts, inventory usually refers to the value of stocks, as distinct from fixed assets. An inventory would include items which are held for sale in the ordinary course of business or which are in the process of production for the purpose of sale, or which are to be used in the production of goods or services which will be for sale.
· Inventory is a list of names, quantities and/or monetary values of all or any group of items.
· Any quantifiable item that you can handle, buy, sell, store, consume, produce, or track can be considered inventory. This covers everything from office and maintenance supplies, to raw material used for manufacturing, to semi-finished and finished goods, to fuel used to power equipment used in the business.
2.2. TYPES OF INVENTORIES – SALES AND COMMODITY INVENTORY MANAGEMENT SYSTEM
Depending up on the type of organization the inventory can be classified into two basic types. They are as follows:
1. Manufacturing Inventory: It is the inventory maintained by a manufacturing organization.
Manufacturing Inventory consists of following three parts:
a. Raw Materials (RM) which are processed to manufacture the final product.
b. Work In Progress (WIP) which refers to the intermediate product which is obtained by processing the raw material but is not fully converted into final product.
c. Finish Goods (FG) that are the fully processed final products that are being manufactured and are ready to be dispatched.
2. Trading Inventory: It is the inventory maintained by a trading organization with a purchase and sale business. Trading Inventory consists of goods that are purchased from a supplier or manufacturer and sold to customers with a certain margin of profit.
In this case, the purchased goods do not undergo any further processing and are sold directly without any change of form.
The Trading Inventory is also referred as the term ‘Stock’.
2.3 INVENTORY CONTROL
The chief motive of an organization is ‘Profit Maximization’. Inventory is an essential part of an organization since it is one of the major factors that affect the profit earned by the organization. Hence controlling or managing inventory is one of the most important tasks necessary to achieve organizational goal of earning maximum profit and reducing costs and expenses.
Inventory Control is a technique of maintaining and monitoring the size of the inventory at appropriate level, so that the production and distributions take place effectively.
The main objective of inventory control is to achieve maximum efficiency in production and sales with the minimum investment in inventory.
Inventory Control is achieved by:
– Purchasing items at proper time and price, and in right quantity.
– Provision of suitable storage locations with sufficient space.
– Maintaining proper level of stocks.
– Adequate inventory identification system.
– Up-to-date and accurate record keeping.
– Appropriate requisition procedures.
2.4 ADVANTAGES OF INVENTORY CONTROL
Inventory control or management has several advantages as stated below:
1. Provides protection against fluctuations in demand and supply by monitoring the trends in demand and supply.
2. Ensures a better service to the customers by avoiding the out of stock situations by keeping a check on the minimum stock levels.
3. Helps to reduce risk of loss on account of obsolescence or deterioration of items.
4. Helps to reduce administrative workload in respect of purchasing, inspection, store-keeping, etc. thus in turn reducing manpower requirements, and consequently costs.
5. Helps to make effective utilization of working capital by avoiding its blockage in excess inventory.
6. Ensures to maintain a check against loss of materials through carelessness or pilferage.
7. Facilitates cost accounting activities. Eliminates the possibility of duplication in ordering or in replenishing stocks by centralizing the source from where the purchase orders are issued.
2.5 ROLE OF SALES ANALYSIS IN PROFIT MAXIMIZATION
Inventory control is not all about managing stocks and ordering goods. But inventory control combined with efficient analysis tools can be truly effective as it can help us identify the trends in the demand for various products by carrying out various types of analysis.
This includes comparative study of sales as well as sales analysis concentrated on a single product. Carrying out such analysis at regular intervals can help the shop manager to decide upon the future reordering strategies and taking some major decisions regarding purchase of goods.
3. REVIEW OF LITERATURE:
3.1. SCOPE OF THE PROJECT – SALES AND COMMODITY INVENTORY MANAGEMENT SYSTEM APPLICATION OF INVENTORY CONTROL OR STOCK MANAGEMENT IN OUR SELECTED DOMAIN – A SUPER-MARKET
Inventory management or inventory control is a very useful technique for managing the stocks and sales records of a Supermarket which is our selected domain of implementation for the software. The super market stores and sales various products which includes packed foodstuffs and drinks, milk products, glossary, decorative items, cosmetics and many other products of day to day use. It also stores some costly items like wrist watches, small electronic goods, artificial jewelry etc. Also there are some household goods like washing powders, cleaning equipments, gaskets etc. Managing all these products, sufficient stocks, sales records, also analyzing sales and reordering from time to time is a difficult job. To do it more effectively and correctly a better inventory control or stock management is required. This is provided by our software ensuring an efficient inventory control and rigorous sales analysis facility. Our software helps to manage the daily sales records and assist in billing process as well. It also includes reordering level and reordering quantity and gives appropriate alerts, thus maintaining a safe stock. The software also provides authorized users to perform sales analysis of various products. By providing this facility, our software will prove to be extremely useful to adjust the purchase and sales strategies leading to an increase in profit.