Optimum Level of Inventory
How much inventory of each item is to be maintained? This is the result of trade off between keeping very high inventory resulting into high inventory holding costs vs keeping very low inventory with high risk of stock out. A related question is when to order and how much to order ? What should be the level of recorder
point and safety stock ?
Location and Layout of Store
Location of store should be convenient from point of view of receipt and inspection of material and also from the point of view of easy accessibility to internal users. It also depends on the type of items handled, e.g. heavy material requiring rail head etc.
Layout depends on following factors :
- Safety from theft and pilferage,
- Damage etc.,
- Easy and safe storage,
- Minimising unnecessary handling within the stores,
- Efficient use of space, and
- Easy physical verification.
Storage System
A good storage system keeps in mind easy location and withdrawal of items when required; easy to physical counting/verification; easy to readjust to allow storage of new ambivalence of materials, minimizing use of specialized material handling equipment etc.
There are usually following three material location systems prevalent :
Fixed Location
Items of particular type have pre-specified location and space. When this space is vacant other items usually are not placed here. Codification system earlier discussed, can be used by extending the code of an item to include its location in the stores.
Random Location
The items be stored wherever space is available, as and when the item arrives in the stores. It creates difficulties in terms of locating the item when needed, same item may be placed at more than one place, physical verification to assess the present stock position etc.
Zoned Location
Items of a particular group type are stored in an area earmarked for that group. Individual items of the group may be stored with respect to fixed or random location. Group codes can be used effectively.
Additionally, depending upon the type of item; stacking tray, shelf, slotted angles shelves can be effectively utilized.
Different types of containers which are compatible with the type of storage and material can also be effectively used to achieve safety, convenience, withdrawal and inspection.
Receiving Inspection and Record Keeping
All the material received at the store should be inspected as per the procedure specified with respect to quantity as well quality. It should tally with the specifications contained in the purchase order issued by the purchase department, and also with the document received along with the material received. Agreed upon sampling techniques and testing procedures can be effectively used. Bad and damaged items not meeting the quality specification should be segregated from the good once.
Proper and correct records for all receipts and issues need to be maintained for stores accounting, for checking present stock position, help the accounts and cost accounting functions in the organisation, to help compile and provide information for planning and decision making to all relevant levels and sections.
Material Handling and Equipment
The total system should be designed to minimize the unnecessary handling throughout the plant including the interior of stores specifically. The main
objectives of material handling and equipment are as follows :
- To minimize the total material handling cost,
- To maintain proper flow of material throughout the plant, though all sections,
- To ensure safety of material during movement and to minimize damage and to reduce accidents,
- To reduce inter-movement time, and
- Compatible with material handling equipment. Different groups of equipment are various types of conveyors, various types of elevators, cranes, transporting and storing equipment, pneumatic liquidizing equipment, and earth moving equipment etc.
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