Materials management

 This discover examines the materials management procedure in the context of current manufacturing organizations, with an objective of recommending one of the most right materials management technique for the 1990s. Problems related to inventory management, materials distribution, client order processing, and production scheduling are addressed inside this objective framework.

The American Production and Inventory Control Society defines inventories as stock keeping items, held at stocking points, and serving to decouple successive operations in a manufacturing or distribution method (Peters, 1986). Inventories are also defined in an accounting context, as "the aggregate of those people merchandise of own property which are: (1) held for sale inside ordinary course of business; (2) inside the system of production for later sale; or (3) held for modern-day consumption within the production of goods and services . . . for sale" (Meigs and Meigs, 1988, p. 120).

In real world situations, inventories can be comprised of tangible goods, for instance aircraft component parts, or of intangible services, just like airline tickets. What is significant, in this context, is how the products and services be owned by the entity possessing the inventories.

Materials management and control is an essential managerial function. There are numerous reasons providing significance towards materials management and control function. Among the a lot more significant of these factors.

1. It prices dollars to maintain inventories. This fact is often a seemingly easy and obvious one; however, it's 1 that is certainly often overlooked. If a firm's price of capital is 15 percent, the annual capital price of carrying an inventory valued at $100,000 is $15,000, although it could cost $150,000 in interest charges per annum to carry an inventory valued at $1,000,000. Additionally, it costs money to store, handle, and maintain an inventory. In this context, it is desirable to keep inventories at the lowest feasible levels.

 

3. Inventories are subject to obsolesence. Goods and materials maintained in inventory may become obsolete. Therefore, to avoid losses via obsolescence, it's desirable to obtain materials management and manage procedures which insure that stocks are "turned" just before the development of obsolesence.

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