Inventory Management: Control Levels, Methods and EOQ model! The objective of inventory management is to minimize the total of inventory carrying and ordering costs while ensuring that 'stock-outs' do not occur and the surplus stocks are not accumulated and carried. Inventory Management Control Levels: Firms establish control levels for standard materials, which are in regular use. Control levels cannot be [...]
The following points highlight the four main inventory systems. The systems are: 1. Perpetual Inventory System 2. Continuous Stock Taking System 3. Periodic Stock Taking System 4. Two Bin System. 1. Perpetual Inventory System: CIMA defines perpetual inventory system as "the recording as they occur of receipts, issues and the resulting balances of individual items of stock in either quantity [...]
In this article we will discuss about:- 1. Reasons for Stock Discrepancies 2. Steps to Avoid Stock Discrepancies 3. Accounting Procedure. Reasons for Stock Discrepancies: The possible reasons for discrepancy between physical stock and stock shown in records may be due to the following: (a) Shortage of material due to spoilage, evaporation, wastage in material handling, breakdown in handling and [...]