MSE 504, Group #2
Arnulfo Barreda
Pouya Dehghani
Niloofar Khatibi
Michelle Milloy
Curtis Pederson
Mike Romiski
Both deal with overall cost control and planning to use resources in
appropriate ways:
Budgeting - The process of planning and controlling the use of assets in
business activities.
Benefits of Inventory Budgeting
Inventory Budget Considerations
Inventory Control - The process of managing the timing and the quantities of
goods to be ordered and stocked, so that demands can be met satisfactorily
and economically
Methods of Inventory Control
Inventory Control Records
Steps to Control Inventory
Benefits of Controlling Inventory
Niloofar Khatibi
Inventory budgets allow companies or firms to avoid inventory
obsolescence and wasted capitol from useless goods.
industries use inventory budgets in order to make inventory decisions, and
the budgets can be made for specific products produced or for specific
purchasing seasons.
If a company purchases too much inventory that must be sold in a specific
time frame it forces the business to liquidate the inventory at much less than
the full price.
Budgets also help new purchasing managers make better decisions
regarding which products they choose to purchase.
Benefit of inventory purchasing budgeting is finding the lowest cost
inventory.
Curtis Pederson
Inventory Budget Considerations
Being conscious of the fact that the amount of stock the business requires
can change the value of the spenditure
After the inventory budget have been set, companies will determine the cost
of goods sold for the budgeted income statement.
Determine how many units it has on hand and how many units it wants at
the end of the year.
Direct material budget to determines the amount of additional materials that
are needed to meet the projected production levels.
Direct labor budget is also very important in the inventory
process, as it determines the number of direct labor hours
needed in order to meets the forecasted inventory demand.
Michelle Milloy
Methods of Inventory Control
The Eyeball System
The reserve stock system
Perpetual inventory systems
The Stock control
Inventory Control Records
Perpetual inventory control records
Out-of-stock sheets
Open-to-buy records
Purchase order files
Steps to Control Inventory
Inventory Planning
Establishing order cycles
Balance Inventory Levels
Review Stocks
Follow-up and Control
Mike Romiski
 Keeps the overall costs associated with having inventory as low as possible without
creating problems.
 Inventory control is a delicate balance at all times between having too much and too little in
order to maximize profits
 Helps balance the stock as to value, size, color, style, and
price line in proportion to demand or sales trends.
 Help plan the winners as well as move slow sellers
 Helps secure the best rate of stock turnover for each item.
 Helps reduce expenses and markdowns.
 Helps maintain a business reputation for always having
new, fresh merchandise in wanted sizes and colors.
Pouya Dehghani
Budgeting vs. Inventory Control
“Budgets
are an important tool for managing various
functions in a business. Company managers may have
annual budget meetings where they discuss the budgets
and how much money is to be spent on certain items.”
Facts
Types
Significance
Considerations
Warnings
Arnulfo Barreda