10 Questions
What is one of the benefits of inventory control?
To minimize inventory costs
What type of product is considered a basic input that is converted into a finished product through the manufacturing process?
Raw Materials
What is an example of a factor that affects inventory control?
Type of product
What is the purpose of Work-in-progress inventory?
To store semi-manufactured products
What is an example of a supply in inventory control?
Tools and equipment
What is the primary goal of stabilizing employment through inventory management?
To improve labor relations and workforce planning
What is a key aspect of maintaining a healthy labor relationship through inventory management?
Matching labor skills with machine capacities
What is a potential outcome of effective inventory management in terms of labor relations?
Enhanced employee morale and job security
What is a key consideration when developing an inventory management strategy to improve labor relations?
Understanding the capabilities of human resources
What is a potential benefit of integrating human resource planning with inventory management?
Enhanced labor relations and workforce stability
Study Notes
Inventory Concept
- Inventory refers to the value or amount of materials or resources on hand, including raw materials, work-in-process, finished goods, stores, and spares.
Importance of Inventory Control
- Balances the stock-out cost/opportunity cost due to loss of sales against the costs of inventory.
- Minimizes losses due to deterioration, obsolescence, damage, pilferage, etc.
Benefits of Inventory Control
- Ensures an adequate supply of materials.
- Minimizes inventory costs.
- Facilitates purchasing economies.
- Eliminates duplication in ordering.
- Better utilization of available stocks.
- Provides a check against the loss of materials.
- Facilitates cost accounting activities.
- Enables management in cost comparison.
- Locates and disposes of inactive and obsolete store items.
- Provides a consistent and reliable basis for financial statements.
Types of Inventory
- Raw Materials: Basic inputs converted into finished products through the manufacturing process.
- Work-in-Progress (Intermediate Products): Semi-manufactured products that need further work before becoming finished goods.
- Finished Goods: Completely manufactured products ready for sale.
- Supplies: Office and plant materials not directly entering production, but necessary for the production process, with no significant investment (e.g., tools and equipment).
Objectives of Inventory Control
- Meet unforeseen future demand due to variations in forecast and actual figures.
- Average out demand fluctuations due to seasonal or cyclic variations.
- Meet customer requirements timely, effectively, efficiently, smoothly, and satisfactorily.
- Stabilize employment and improve labor relations by inventorying human resources and machine efforts.
This quiz covers the basics of inventory management, focusing on the definition and significance of inventory in business operations. Test your knowledge on the value and importance of materials or resources on hand.
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