Sri Ramakrishna Institute of Technology,Coimbatore-10

(Approved by AICTE , Affiliated to Anna University)

Accredited by NAAC with ‘A’ Grade
Department of Mechanical Engineering
(Accredited by NBA)

UNIT-5
INVENTRY CONTROL AND RECENT TRENDS IN PPC

1. Define term inventory and inventory control.

An inventory is a stock of an item or idle resource held for future use. Inventory
control may be defined as the Scientific method of determining
what to order , when to order and how much to order and how much to stock so that
the costs associated with buying and storing are optimal without interrupting
production and sales.

2. Mention at least four reasons for keeping an inventory.

 To maintain independence of operations.
 To meet variation in product demand.
 To allow flexibility in production scheduling.
 To provide a safeguard for variation in raw material delivery time.

3. What are inventory costs?

 The major costs associated with procuring and holding inventories are:
 Ordering costs,
 Carrying(or holding) costs,
 Shortage (or stock out) costs
 Purchase costs.

4. Define the following terms: (a) Lead time (b) Re-order point
(a)Lead time: The time gap between placing of an order and its actual arrival in the
inventory is known as a lead time.
(b) Re-order point: The level of inventory at which an order is placed is known as Re-
order point or re-orders level.

5. Define the terms buffer stock, and re-order quantity.

Safety or buffer stock: This represents the minimum stock which must be maintained
at all times. If stock is less than the buffer stock, then the work will stop due to shortage
of materials.
Re-order quantity: The quantity of items to be ordered at re-orders level is known as
re-order quantity.

6. What is EOQ?
The technique of economic ordering quantity (EOQ) strikes a balance between the
ordering cost and the carrying cost. EOQ is the size of order which minimizes the total
cost of carrying inventory and ordering.

7. What do you understand by fixed-time period model/

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 Sri Ramakrishna Institute of Technology,Coimbatore-10
(Approved by AICTE , Affiliated to Anna University)
Accredited by NAAC with ‘A’ Grade
Department of Mechanical Engineering
(Accredited by NBA)

The fixed time period models are also referred to us the periodic system, periodic
review system, fixed order interval system and P model.
In a fixed time period system, periodic review of inventories is made and order is
invariably placed in that period.

8. What is JIT?
Just-In-Time is a management that strives to eliminate sources of manufacturing
waste by producing the right part in the right place at the right time.

9. What are the objectives of JIT?

 The JIT is applied to achieve the following goals:
 Zero defects
 Zero setup time
 Zero inventories
 Zero handling
 Zero breakdowns
 Zero lead time and
 Lot size of one.

10. List the seven wastes that becomes the target of elimination in a JIT process
 Waste of over production
 Waste of waiting
 Waste of transportation
 Waste of processing itself
 Waste of stocks
 Waste of motion
 Waste of making defective products

11. What do you mean by kanban production control system?

Kanban means sign or instruction card in Japanese. A kanban is a card that is
attached to a storage and transport container. It identifies the part number and
container capacity, along with other information.

12. Differentiate between Pull system and Push system

A kanban system, is a Pull system, in which the Kanban is used to Pull parts to the
next production state when they are needed i.e., in Pull system product is made to
order.
A MRP system is a Push system in which a detail production scheduled for each part
is used to Push the parts to the next production stage when scheduled i.e., in a Push
system the product is made to stock.

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 Sri Ramakrishna Institute of Technology,Coimbatore-10
(Approved by AICTE , Affiliated to Anna University)
Accredited by NAAC with ‘A’ Grade
Department of Mechanical Engineering
(Accredited by NBA)

13. What is MRP II?

MRP II is defined as a computer base system for planning scheduling and controlling
the materials, resources and supporting activities needed to meet the Master
Production Schedule.
Infact MRP II consist of virtually all the functions in a PPC system plus additional
business functions that are related to production.

14. What are the functions of MRP II?

Management planning: Business strategy aggregate production planning, master
production scheduling, rough cut capacity planning and Budget planning.
Customer services: Sales forecasting, order entry, sales analysis and finished goods
inventory
Operations planning: Purchase order and work order release
Operations execution: Purchasing, product scheduling and control, work-in-process,
inventory control shop floor control and labour hour tracking
Financial function: Cost accounts receivable, accounts payable, general ledger and
payroll.

15. Define the terms inventory and inventory control?

An inventory is a stock of an item or idle resource held for future use.
Inventory control may be defined as the scientific method of determining what to
order, when to order and how much to order and how much to stock so that costs
associated with buying and storing are optimal without interrupting production and
sales.

16. Differentiate between anticipation and fluctuation inventories.

Anticipation inventories: these are stocks maintained to meet the anticipated i.e.,
expected demand.
Fluctuation inventories: these are safety stocks maintained to meet the unexpected
demand and thereby to avoid the risk of losing sales.

17. Contrast lot size inventories with transportation inventories.

Lot size inventories: Goods are brought in large to get the benefit of discount. The
goods so purchased are stocked unit sale or use.
Transportation inventories: When transport of items requires a long time, then items in
transport represent the inventory.

18. Mention at least four reasons for keeping an inventory.

 To maintain independence of operations
 To meet variation in product demand
 To allow flexibility in production scheduling
 To provide a safeguard for variation in raw material delivery time.

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 Sri Ramakrishna Institute of Technology,Coimbatore-10
(Approved by AICTE , Affiliated to Anna University)
Accredited by NAAC with ‘A’ Grade
Department of Mechanical Engineering
(Accredited by NBA)

19. What are inventory costs?

 Ordering costs
 Carrying costs
 Shortage costs
 Purchase cost

20. What do you mean by inventory carrying costs?

Inventory carrying costs are the costs associated with holding a given level of
inventory on hand.
The holding costs include:
Costs for storage facilities
Handling costs
Depreciation, taxes and insurance
Costs on record keeping

21. What is EOQ?

The technique of economic ordering quantity (EOQ) strikes a balance between the
ordering cost and the carrying cost. EOQ is that size of order which minimizes the total
costs of carrying inventory and ordering.

22. What is JIT?

Just-In-Time (JIT) is a management that strives to eliminate sources of
manufacturing waste by producing the right part in the right place at the right time.

23. Mention any four ERP packages that are widely used in India.
 SAP
 JD Edwards
 Mfg/Pro
 BPCS
 Marshal
 Oracle Financials

24. List the “seven wastes” that becomes the target of elimination in a JIT process.
 Waste of over production
 Waste of waiting
 Waste of transportation
 Waste of processing itself
 Waste of stocks
 Waste of motion
 Waste of making defective products

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 Sri Ramakrishna Institute of Technology,Coimbatore-10
(Approved by AICTE , Affiliated to Anna University)
Accredited by NAAC with ‘A’ Grade
Department of Mechanical Engineering
(Accredited by NBA)

25. What is Inventory Control: Explain them.

Purpose of holding the stock, functioning of inventory control, effective running of
stores, Technological responsibility for the state of merchandise, stock control system.

26. What are the Effects of demand on inventories:

Effect of a demand impulse on requirement in successive periods, restrictive on
output increase, fluctuation in distribution channels, stock control system.

27. Write about the Ordering procedures:

Two bin system, ordering cycle system, combination of two bin system and the
ordering cycle systems. Reorder quantity, Reorder range, Effect of splitting and order.

28. Discuss about the Reorder procedure:

Reorder point in the two bin system, reorder procedure in the cycle system, effect of
uncertainty, comparison of replenishment policies, optimistic, realistic and pessimistic
policies.

29. Discuss about the Determination of Economic order quantity:

Economic lot size, ABC analysis. Introduction to computer integrated production
planning system, Elements of JIT system.

30. Describe about the Fundamentals of MRP-II:

From MRP-I to MRP- II, Evolution of MRP-II, closed loop MRP.

31. Write a note on ERP:

Functioning of ERP, features of ERP, scope and benefits of ERP, applications of ERP,
selection of ERP package.

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