The following are important type of inventory re- oder system
- Periodical Review of inventory
- Just in time system commonly know as JIT
- Perpetual inventory re order method
- Martial requirement planning
Just in time Method : The management order as required. This concept was introduced basically to control the holding cost of inventory . The holding inventory not only involves high cost but also involve high risk of damage by fire etc.
This method reduces the holding cost of inventory substantially. The other advantages of jit system that it improves the management control over the inventory and theft and leakages and other manipulation in inventory is minimized. The JIT system also helps to control effectively spoilage or other deterioration.
Perpetual inventory order system :- Under this system the inventory is being automatically updated and management re order the quantity when the system inform about the point at which inventory is to be re ordered.
The great advantage of this system is that inventory level are updated in real time and the management has full information about inventory level. This arrangement improves management control over the important inventory items and their availability.
Martial requirement planning : under this system material is ordered as per the requirement of production department. The production schedule are prepared and on the bases of such schedule the material are ordered. This system is an extension of JIT system .
In JIT system the immediate requirement determine the inventory re order quantity where in case martial requirement planing management prepare more detail plan of production and inventory level are maintain to support production process.
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