STORE PLANNING & CONTROL

Done By :- ( Group no. 8) Rashmi Kumari Richa Arya Ravi Agarwal Rahul Khurana Pushkar (158) (160) (159) (157) (156)

CONTENTS
Introduction Store functions Objectives of store-keeping Stores organization Location n layout of stores Principles of efficient layout of the stores Store house Types of store layout Approaches to stores location Storing of material Record keeping of material Measurement of store efficiency Issue of material Replacement of material Verification of material Disposal of wastage & scrap

INTRODUCTION TO STORES PLANNING

Stores Planning involves the supervision, clearance of incoming supplies, safety of goods & issuing them against authorized requisitions. Stores are prepared for : Purchased Materials, Partly- finished Goods, Finished Goods, Spares, & Consumables.

Finished Goods Storage

STORE FUNCTIONS
Receipt Storage & Preservation

STORES
Verification

Issue & Dispatch

Scrap Management

Recording / Stores Accounting

Material Handling

OBJECTIVES OF STORE-KEEPING
The main objective of stores planning is to efficiently & economically provide the right material at the time when it is required & in the condition in which it is required.

Some other objectives are :Minimization of Cost of Production Availability of materials Advising the management Maintaining a balance between supply & demand Maintaining the value & condition of materials

Steel Store

STORES ORGANIZATION
Based on the roles of stores, as stated earlier, it is necessary to group the various functions appropriately so that they may be assigned to a Section or Division with Managers in charge, in accordance with responsibilities. Tasks of the organization : Formulation of a sound financial policy Efficient planning of work Effective supervision & control of personnel Receipt & distribution of various products

ORGANIZATION CHART :Materials Manager Controller of Stores Deputy Controller

Chief Executive
Marketing Manager Finance Manager

Asstt. Controller
Store Manager

Asstt. Controller Asstt. Controller Asstt. Controller

Warehouse Manager Store Manager Store Manager

Receipt
Inspection

Despatch
Transport Substore Shop 1

Stores A/c

Clearing Despatch Finished Record Keeping Goods Store

Substore Shop 2 Store Taking Audit

location

Arrangement

layout

Straight line movement with minimum of backtracking Minimisation of handling

Rehandling of internel transportation cost

Efficient utilization of storage space

 The floor area should be adequate It should suit to the specific characteristics of the material stored The floor load must be adequate Weighty items should be stored as low as possible The items which are used most should be located near the issuing windows Obstruction such as poles,partitions,staircase.It should be reduced Water-proofing must be assured in the stores area

Location

Centralised

Decentralised

Layout of a Small Storehouse

Layout for a Storehouse of a Repair & Maintenance Workshop

Layout Plan for a Large Factory Storehouse

Typical Layout of a Storeroom

Stores efficiency index=no. of requistions delivered on time/Total no of requistions Storage loss index = Value of lost due to deterioration,obsolescences & pilferage/Average value of inventory Obsolescence index=Value of non-moving items/Total inventory value Space utilisation index=Area used for storage/Total storage area available

APPROACHES TO STORE LOCATION

1. FIXED LOCATION (i) on the basis of supplier (ii) on the basis of similarity of the item (iii) on the basis of the joint issue of the item (iv) on the basis of the size and frequency of the use 2. RANDOM LOCATION 3. ZONED LOCATION

STORING OF MATERIALS
A place for everything and everything at its place - Gap between receiving and issue of material - Various types of stores equipment - Safeguard - Physically verified - Store should be frequently cleaned

RECORD KEEPING OF MATERIAL

1. BIN CARD OR STOCK CARD

2. THE STORES LEDGER

RECORD KEEPING OF MATERIAL

1. BIN CARD OR STOCK CARD (i) showing only quantities (ii) showing quantities and price (iii) showing quantities, unit price, value of each transaction and the value of each stock 2. THE STORES LEDGER (i) contain various accounts

Issue of Materials
The materials stored in the stock room are issued to various jobs or production departments against the authorized materials requisitions.

The issues are recorded in the store ledger and the respective jobs or production departments are debited with the price of material issued.

Material Requisition
Material required for. (specify job or process) Department ..
Quantity Sr No. Description Code No. Rate Demand Supplied Amount Entered on stock register Page No.

No. . Date ...

Requisitioned by

Approved by

Material Issued by

Received by

Pricing methods of Material Issued

FIFO Method Example

April 1 : 200 units purchased @ Rs 5 per unit April 3 : 500 units purchased @ Rs 6 per unit April 6 : 300 units issued to job no. 1001

The issue of 300 units will be priced as under

From the first lot: 200 units @ Rs 5 = Remaining 100 units from second lot =100*6 1600 Closing stock = 400*6 = 2400 1000 600

LIFO Method
Example April 1 : 500 units purchased @ Rs 5 per unit April 3 : 300 units purchased @ Rs 6 per unit April 6 : 400 units issued to job no. 1086 The issue of 400 units will be priced as under First : 300 units @ Rs 6 = Remaining 100 units from second lot =100*5

1800 500 2300

Closing stock = 400*5 = 2000

Average cost Method Ways of calculation: Simple average of the stock on hand at the price of the issue. On the basis of simple moving average. Weighted average cost Method.

Example
1000 units @ Rs 3 5000 units @ Rs 5

The simple average cost would be Rs 4.

The weighted average cost would be: unit cost 3 5 weights 1000 5000 weighted cost 3000 25000 28000 Weighted average cost = 28000/6 = 4.67

Replacement Price Method Standard Price Method

Actual Price Method

Inflated Price Method

Example
Material purchased 100 units @ Rs 15 Normal wastage 10% Remaining material is issued at 16.67 (1500/90) 1500

Replacement of Materials
When the inventories fall below a particular level, they are replenished by the fresh purchases.
The Re order Level is an important technique of inventory control. It deals with: When to order the inventory Size of the order is also considered.

Example Average daily consumption Lead Time

50 units
4 days

Safety Stock consumption Solution

average 2 days

ROL = (Lead Time* Avg. daily consumption) + Safety Stock = (4 days * 50 units) + 100 units. = 300 units. The ROL (300 units) is 200 units above the safety stock (i.e 100 units). The order will be placed for 500 units when the stock reaches to 300 units i.e. ROL

Measurement of Stores Efficiency

Quantitative techniques to measure the store-keepers performance are: Stores efficiency index = No. of requisitions delivered on time Total no. of requisitions Storage loss index = Value of inventory loss due to deterioration,

obsolescence and pilferage

Avg. value of inventory

Qualitative measurement is done through Stock out situation, Checking of records maintained, etc.

PHYSICAL VERIFICATION OF MATERIALS

PHYSICAL VERIFICATION OF STORES IS PROCESS FOR ASCERTAINING CORRECTNESS OF QUALITY AND QUANTITY OF GOOD LYING IN THE STORES ON A GIVEN DATE.

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PURPOSE OF PHYSICAL VERIFICATION OF

WRONG RECORDING IN BIN CARD TO DETECT FRAUD ,THEFT ,LOSS ,DEVIATION FROM THE PROCEDURE TO EXAMINE THE PROCESS OF SORTAGE AND THECONTROL OF STOCK TO POINT OUT OF THE WEAKNESS EVAPORATIONOF ALCOHLIC MATERIALS PILFERAGE

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NAME OF THE STOREHOUSE BIN CARD

BINNO -----------ARTICLE ----------CODE.NO/IDENTIFICATION --------UNIT BIN OF ISSUE----------------MAX STOCK------------MIN STOCK------------ORDER STOCK -----------DANGER STOCK ------------

DATE

DELIVERY OR

QTY /WEIGHT

DELIVERY OR DATE ISSUE NOTE NO

QTY/WEIGHT ------------------RECEIPT NO BALANCE

ISSUE NOTE NO. RECIPT ISSUE BALANCE

C/F
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C/F
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STORE VERIFICATION METHOD

THERE ARE FOLLOWING TWO METHODS OF STOCK VERIFICATION :PERIODIC INVENTORY VERIFICATION PERPETUAL INVENTORY VERIFICATION

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ROUTINE OR PERIODIC INVENTORY VERIFICATION

OBJECTIVES TO CHECK THE STORE RECORD TO PURPOSE THE STAFF FOR INSPECTION AND INTERNAL AUDIT. ITS SIMPLE, MOST CONVENINT & SATISFACTORY

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PERPETUAL OR CONTINOUS STORE VERIFICATION

OBJECTIVES:--NO NEED FOR ADDITIONAL STAFF BECAUSE STOPKEEPER WORKS ACCORDING TO HIS CONVENIENCE ANY CLERICAL ERROR AND DISCREPANCY WILL BE REMOVED BY THIS METHOD STOCK-TAKING IS HELPFUL IN EARLY AND TIMELY DETECTION OF USELESS AND OBSOLETE ITEM. NORMAL OPERATION OF RECEIPT,ISSUE RECORDS ETC.,CONTINOUS UNINTERRUPTED ,WHICH IS NOT POSSIBLE IN ANNUAL STORE VERIFICATION.

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DISPOSAL OF WASTAGE AND SCRAP

THE WASTE & SCRAP CONSISTS OF THE FOLLOWING : SPOILED RAW MATERIAL REJECTED COMPONENTS DEFECTIVE PARTS OBSOLETE STORES AND EQUIPMENTS WASTE FROM THE PRODUCTION DEPARTMENTS. NON RETURNABLE CONTAINERS AND PACKING CASES.

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THANK YOU