Objective of Inventory Control

  • There should not be excessive inventories.
  • There should not be shortage of inventories.
  • There should not be acceptable customer service.
  • The problem of inventory control is very complex because it affects many factors like credit terms, transportation purchasing material, market situations etc.


Steps in Inventory Control

  • Planning the material and operation.
  • Adequate physical control of material.
  • Proper storage.
  • Effective acquisition of material.
  • Stock room security.
  • Record keeping.
  • Posting information.
  • Fixing responsibility of performance.
  • Measuring results.

Management is interested in maintaining supply of stock which provides acceptable customer service. The inventory consumption “Saw tooth” figure where it is assumed that there is uniform and constant rate of usage. Also the replenishment is instantaneous as shown in fig. (a). if replenishment takes 15 days then place the order as shown in fig. (b).


There are two problems:

  • Economic for size or optimum lot size.
  • Re-order point.