Question

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Record accuracy is a prerequisite to inventory management, production scheduling, and ultimately, sales. For this case study assignment, choose a local organization and research how it manages its inventory. Identify how the company’s inventory is classified and what strategies the organization uses to ensure accurate inventory records are maintained. Specifically, identify at least 8-10 items within the company’s inventory and determine which items should be A, B, and C items. Explain your reasoning behind labeling the inventory items as A, B, or C items. Also, discuss the advantages and disadvantages of using a cycle counting strategy or a complete inventory strategy.

Answer 1

Local organization is a university which used ABC analysis to record inventory accuratley. A type inventory required tight control and accurate record of them because A type inventory is highly valuable but lower in quantity. B type inventory requires less tight control and good record because they are more valuable than C type but less than A type. C type inventory requires simple control and minimal record because of its low value and high quantity.

In university the inventory are Computer systems, printer, Projectors, Blackboard, chairs, table, Pen, markers, paper.

Computer systems, printer and projectors are A type items because they are of high cost and value. also they are less in quantity so they requires tight control and accurate record.

Table, chairs and blackboards are Type B items because they are less costly than type A but more than Type C items. They requires moderate control and record.

Pen, markers, paper like items are type C because they are very very less expensive and high in quantity. for example a packet of 100 a4 sheet cost less than one dollar.

Cycle counting is a popular inventory counting solution that allows businesses to count a number of items in a number of areas within the warehouse without having to count the entire inventory.

The advantages of this strategy are that inventory record is more accurate. It helps management to see discrepencies in inventory record in timely manner. This strategy helps management to keep focus on inventory and prioritize them accordingly.

The disadvantages of cycle counting is only the problem with organization and management if they do not give time and put efforts in regular stock audit of inventory.