Inventory Management

Home & Office Appliances Co.

PRESENTED BY:
STUDENT ID:
COURSE ID: CIS101
SECTION:11
What is Inventory Management ?

 Inventory or stock is the goods and materials that a business holds for the ultimate goal of resale.

 Inventory management is the management of inventory and stock. It’s a management system
designed to record and control the amount of inventory ordered, stored and sold by a business.
Recording Formats
Perpetual System

 A method for recording inventory after each and every

transactions are made i.e. sales and purchases

 Used by big business and corporations

 Periodic System

 Under this system the inventory record is made at the end of the period after all the sale and
purchases are made

 Followed by small and medium businesses

 This system was followed for this project as well

 Inventory Management for Home & Office Appliances Co.

 Purchase and Purchase Return Inventory List

 Sales and Sales Return Inventory List

 Stock List
 Purchase and Purchase Return List

 For this list, the calculations needed to be made was for the Net Purchase Inventory amount,
Purchase Discount Amount, Total Purchase cost and the Total Stock of Inventory after the
purchases

 To calculate the Net Purchase amount, the Purchase Returns unit was subtracted from the original
Purchased amount
• FOR THE DISCOUNTED AMOUNT FIGURE THE IF FUNCTION WAS USED
TO CALCULATE THE AMOUNT OF DISCOUNT IF APPLICABLE FOR THE
PURCHASED AMOUNT EQUAL OR ABOVE 50 UNITS
 For the Total Cost figure the net purchase amount was multiplied with the unit cost and subtracted the discounted
amount, if any from the obtained result
 The total units in stock figure was calculated by simply adding the net purchased inventory value and the
inventory list from previous period i.e. the opening inventory
 Sales and Sales Return List

 For this list, the calculations needed to be made was for the Net Sales Inventory amount, Closing
Inventory, Sales Discount Amount and the Total Sales figure

 To calculate the Net Sales amount, the Sales Returns unit was subtracted from the initial Sold
amount
 For the discounted amount figure the IF function was used to calculate the amount of discount if applicable for
the sold amount equal or above 70 units
 For the Total Sales figure we multiplied the net sales amount with the unit sales price and subtracted the
discounted amount, if any from the obtained result
 For the closing inventory figure, the net sales figure was subtracted from the total stock of inventory after the
purchases were made
Stock List

 In this list calculations were made to arrive at figures for the reorder level, quantity and safety
inventory

 Reorder Level = (Maximum Usage × Maximum Lead Time) + Safety Stock, as per the formula
the maximum usage was multiplied with maximum lead time and safety inventory was added
with the result to get the reorder level
 Reorder Quantity = Average Usage × Average Lead Time, as per the formula the average usage was multiplied
with the average lead time to get the reorder quantity
 Safety Inventory=(Maximum Usage × Maximum Lead Time) – (Average Usage × Average Lead Time), as per the
formula safety stock was calculated by subtracting the product of average usage and average lead time from the
product of maximum usage and maximum lead time
 To get the net purchase list from the purchase sheet the VLOOKUP function was used with the product id as the
lookup value, the table from the purchase sheet as the range and 5 as the column of the net purchase amount and
FALSE for the exact match
 To get the net sales list from the sales sheet the VLOOKUP function was used with the product id as the lookup
value, the table from the purchase sheet as the range and 5 as the column of the net purchase amount and FALSE
to get the exact match
Thank You