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26 Cards in this Set
- Front
- Back
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Periodic actual counting and recording of products in stock in all storage areas.
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Physical Inventory Concept
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Usually done at end of the month
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Physical Inventory Concept
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In large operations this is NOT done at one time. Instead taken by storage areas or sections each week.
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Physical Inventory Concept
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How is physical inventory calculated in large operations?
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Not done at once. Instead storage areas or sections are complete each week, with all being finished by the end of the month.
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Purchases and issues continuously are recorded for each production in storage, making the balances in stock available at all times.
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Perpetual Inventory Concept
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Requires considerable labor to maintain and are used only in large operations that keep a large of products in stock.
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Perpetual Inventory Concept
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Computerized inventory control system to keep up-to-date on inventory.
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Perpetual Inventory Concept
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Inventory Turnover
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= Costs of goods sold / Average Inventory Level
Usually done on a monthly basis. |
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Average Inventory Level
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(Begin Month + End Month) / 2
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A turnover of 2 - 4 months is desirable.
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A turnover of 2 - 4 months is desirable.
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The principle that effort, time and money for inventory should be allocated among products according to their value.
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ABC Inventory Method
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Generally restricted to products in dry and frozen storage
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Perpetual Inventory Concept
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High Priority / Value items
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A (in the ABC Inventory Method)
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A (ABC) items represent how much of the total inventory
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75% - 80%
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These items represent 75% - 80% of total inventory value.
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A (ABC)
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There are not too many of these items in the inventory (ABC)
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A (ABC)
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A (ABC) Items should use which inventory concept? Perpetual or Physical?
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BOTH Perpetual & Physical
Every / Every Other day Frequently |
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Medium Priority / Value
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B (ABC)
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Don't cost as much (10% to 15% of total inventory value
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B (ABC)
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B (ABC) represent how much of the total inventory value
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10% to 15%
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B items represent how much of the total inventory
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20% to 25%
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Low priority / value
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C (ABC)
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Lowest value C items are how much of the inventory value
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5% to 10%
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B items should be put into the inventory every _____
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Every Week
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Lowest C items represent how much of the total inventory
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60% to 65%
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C items should be put into the inventory every _______
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Month / Quarter / Year
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