Stock Control:
Definition and Explanation:
The materials
purchased by a concern may be classified as stock
items which are taken into store and held until
required, or as direct deliveries to the point of
consumption. The control of those materials which
are stock items is known as stock control.
Function of Stock Control:
The function of
stock control is to obtain the maximum stock
turnover consistent with the maintenance of
sufficient stocks to meet all requirements. Stock
turnover is the ratio which the cost of the
materials used per annum bears to the average stock
of raw materials. Discussions with regard to the
quantity of materials stocked are reached after may
consideration such as:
- The
availability of capital for the provisions of
stocks
- The storage
space available
- The cost of
storage
- Risk of loss
due to fall in prices, deterioration,
obsolescence, theft etc.
- Economic order
quantities
- Delivery
delays
For effective
control of materials, it is important to decide upon
different levels of materials. These levels are
maximum limit or level, minimum limit or level and
re-order level or ordering point or ordering level.
Maximum, minimum and re-order levels are not static.
They must be varied to suit the changing
circumstances. Thus, alteration will take place if
the usage of certain materials is increased or
decreased. If the re-order period changes, or if, in
the light of a review of capital available, it is
decided that the overall inventory must be increased
or decreased. Relevant Articles:
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