Different methods of inventory in purchasing?
FIFO and weightage average method are the generally used methods in inventory calculations.
Inventory can be valued in many different ways but there are 3 popular methods. One is called FIFO (first in first out), another called LIFO (last in first out) and the last called weighted average. See here for the basics and a more thorough description of Inventory Valuation.... http://vitalbusinessinfo.blogspot.com/2009/10/basics-of-inventory-valuation.html
Basically Inventory is valuated an asset. You keep inventory to service your customers and to smoothen production by purchasing semi-finished stuff. Inventory ties up your working capital hence the objective is to return your investment as soon as possible. A good measurement is the ratio of inventory turnover. Inventory becomes a liability when the life cycle ends either by becoming obsolete/discontinued or by means of expiry. Write offs are valuated as liabilities.
Purchasing records found in purchasing department are: inventory records, invoices, leasing contract files, price quotation files, and prior payment report, purchase order, purchase requisition files, requests for proposals and contract purchasing records . However, they vary depending on the nature of a business.
John L. Jaech has written: 'Training manual on statistical methods for nuclear material management' -- subject(s): Handbooks, manuals, Inventories, Inventory control, Nuclear fuels, Nuclear industry, Problems, exercises, Statistical methods 'Statistical methods in nuclear material control' -- subject(s): Inventories, Inventory control, Nuclear fuels, Nuclear industry, Statistical methods
I am giving an answe on the basis of my Retail Experience..... In Retail supply Chain we are using a Vendor to DC and then DC to Stores......If we are replinishing our store from Distribution Center then it will be Relpenishment Inventory and Once we are purchasing from supplier to fulfill our requirment of DC that will called Requirement Planning.......
These are some differences in the general cases. FINISHED PRODUCT INVENTORYRAW MATERIAL INVENTORYUsually there is no lead timeUsually there is a lead timeQuantities reach the inventory individually or by groupsQuantities reach the inventory all togetherThe holding cost is greater than the holding cost for the raw material inventoryThe holding cost is less than the holding cost for the finish product inventoryproduction starts if the inventory is emptyproduction stops if the inventory is emptyUsually is smaller…
The manager responsible for that inventory will usually make purchasing decisions within given parameters. He or she may have a dollar maximum that can be invested, or space restrictions or objectives for inventory turns. So, in an auto dealership, the Parts Manager orders the parts, the Sales Manager orders the vehicles, etc.