Methods of IM
AS2
Process of IM
Concepts of IM
100
Full form of HIFO
Highest in First Out
100
Definition of Inventory as per AS 2
A. Held for sale in the normal course of business i.e finished goods
B. Goods which are in the production process i.e work in progress
C. Raw materials which are consumed during production process or rendering of services (including consumable stores item)
100
Identify the first step of inventory management process.
Inventory Forecasting and Planning
100
Define Safety Stock.
Maintain a buffer stock to account for uncertainties in demand or supply delays. Calculate safety stock based on historical demand variability and lead time to prevent stockouts during unexpected demand spikes.
200
Explain Dropshipping
Dropshipping is an inventory management technique that doesn’t require the seller to keep inventory items in stock. Instead, the seller works with a third-party supplier who ships the product directly to the customer when a purchase is placed.
200
Outline the concept of NRV
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale
200
How would you ensure proper storage and organization of inventory
Items should be carefully labeled, categorized, and stored in a way that they can be easily found and the risk of damage to the inventory can be minimized.
200
Stock auditing?
Conduct cycle counts at regular intervals to catch discrepancies, ensuring accurate inventory data.
300
Formula of Re-order point
Reorder Point = Lead Time * Demand Rate + Safety Stock
300
What information should be disclosed in the financial statements
Accounting policy adopted in inventory measurement
Cost formula used
Classification of the of inventory such as finished goods, raw material & WIP and stores and spares etc
Carrying amount of inventories carried at fair value less sale cost
Amount of inventories recognized as expense during the period
Amount of any write-down of inventories recognized as an expense and its subsequent reversal if any.
300
Describe the point of "Setting Inventory Levels" including all three levels.
Minimum level
Maximum level
Danger level
300
How automation and technology integration can be done in inventory management?
Use of inventory management software, barcoding, RFID systems, and real-time data tracking to streamline processes.
400
Explain this figure in detail
Answer must include the explanation of holding cost, ordering cost, total cost and identification of EOQ
400
Interpret the exceptions of AS2
(a) work in progress in the construction business, including directly related service contracts (b) work in progress of service business (consulting, banking etc) (c) shares, debentures and other financial instruments held as stock in trade (d) Inventories like livestock, agricultural and forest products, mineral oils etc.
400
Explain complete process of inventory management in detail.
Inventory Forecasting and Planning
Setting Inventory Levels
Supplier Management
Order Placement
Receiving and inspecting
Inventory storage and organization
Inventory Control and Monitoring
400
Elaborate the significance of inventory management in detail.
Any four points:
Cost Control
Meeting Customer Demand
Efficient Operations
Improved Cash Flow
Reduced Waste and Obsolescence
Accurate Forecasting
Better Supplier and Vendor Relationships
Enhanced Reporting and Analysis