Scientific inventory control (I.C.) system is designed keeping the follow tag objectives in view:
image source: qstockinventory.com
ADVERTISEMENTS:
1. To ensure improved and better service to users. Scientific inventory control ensures adequate and prompt supplies of materials at lowest prices and prevents shortages and avoids work interruptions at the same time keeping stock levels low.
There is no point in reducing inventories at the cost of service. In fact, with rigorous inventory control, stock outs are avoided. Production programmes can be efficiently planned resulting in reduction of the cost of production or operations. Best service to the company’s customers is automatically provided.
2. To keep capital tie-up at the minimum so the available capital is most effectively used. The approach should be to keep down investments in inventories so as to release much needed and scarce funds for expansion or alternative uses of the company.
3. To increase inventory turnover ratio.
ADVERTISEMENTS:
4. To reduce costs by taking best buying decision regarding when to buy and how much to buy. Both inventory carrying costs and acquisition costs (purchase costs) are to be kept at the optimum levels. Estimate of requirements must be framed on well reasoned forecasts so that duplication in purchasing through piecemeal demands is avoided.
5. To improve management controls so that remedial action is taken well before a particular situation develops.
6. To reduce risks due to obsolescence, deterioration and so on. Checks may be provided to help in easy identification and disposal of obsolete stores and to avoid loss through carelessness or pilferage.
7. To ensure effective coordination between departments and to develop inter-departmental harmony.
ADVERTISEMENTS:
8. To increase profit.