Methods of Materials Management _ ABC analysis and EOQ

Materials management is an important function of an organization covering various aspects of input processes such as raw materials, procurement of machines,, equipment and spare parts for the establishment and maintenance of plant. Thus in a production process materials management can be considered as preliminary to transformation process.

Materials Management involves planning, directing controlling and coordinating those activities which are concerned with materials and inventory requirements, from the point of their inception to their introduction into the manufacturing process.

it begins with the determination of materials quality and quantity and ends with its issuance to production to meet customer’s demand as per schedule and the lowest cost.

Thus we can say that Materials Management is a basic function of the business that adds value directly to the product itself.

In second phase of the topic, we are going to discuss about Inventory Control. It is an important function under materials management. It is used to maximize the inventory of company. The goal of inventory is to generate the maximum profit from the least amount of inventory investment without intruding upon customer satisfaction levels. It is such a critical piece of organization’s operations that it is too important to leave to human error or a system.

We are going to discuss about the methods of inventory control namely, ABC Analysis and EOQ Method. Information about the methods, its advantages and disadvantages will be discussed in the session along with examples on both methods.