A Case Study on Inventory Management Using Selective Control Techniques

Incorporation of appropriate inventory management system plays an important role in determining the financial health of a manufacturing company. In most of the cases, unjustified inventory of raw materials are kept causing certain loss to the company. Keeping the above in mind, in the present work, a task is undertaken to find out relevant items that need stringent inventory management in one manufacturing company. The inventory of raw materials is classified into seven categories of which four categories of raw materials are found to cover around 70% of the total inventory.

Since it is difficult to apply proper inventory control model for each item separately because of its huge variety, it is necessary to find out few significant items using 'Selective Control' method. ABC and FSN analyses along with XYZ analysis are done. The analysis shows the state of the present inventory management. Following the desire of the management, AFX study is also undertaken. Rigorous indent control and consumption control are strongly recommended for items that has maximum financial impact and high demand in production shops.