Rate of Consumptions and Inventory

A certain minimum stock level of all the necessary inputs maximum production rate per day x quantities required per unit of product x number of days required to procure plus some extra stock as safety margin) shall be always maintained so that there wiU be no shortage of such items. However, certain items can be very costly, and hence they shall be bought after a careful study of the data for the total production, actual sales, and actual consumption for the last six months to a year. A reasonably accurate forecast of the demand for the products will be found very useful for the procurement of the right quantities of such costiy items. 

The quantity of raw materials shall be thus sufiicient to run the plant as per need (to fulfil commitments made for supply of products, to maintain smooth operations for a continuous plant, and to ensure safe and pollution firee operations). 

Reorder point for each important material shall be checked and revised if necessary. 

However, excessive inventory of inflammable, dangerous, toxic items shall be minimised. 

A track shall be kept on availability of cheaper materials in certain seasons from some particular source lower transport charges and other such favourable factors. The aim shall be to minimise the landed cost at the site. 

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