Role of material_management

Jun 28th, 2015
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Introduction Materials management plays vital role in logistics that deals with the tangible components of a supply chain. Materials management covers the acquisition of raw material, replacements, quality control of purchasing and ordering such parts and the standards involved in ordering, shipping, and warehousing the said parts.

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2MATERIALSBASIC CONCEPTS AND FORMULAE1.Maximum Level: It indicates the maximum figure of inventory quantity held in stock atany time.2.Minimum Level: It indicates the lowest figure of inventory balance, which must bemaintained in hand at all times, so that there is no stoppage of production due to nonavailability of inventory.3.Re-order level: This level lies between minimum and the maximum levels in such a waythat before the material ordered is received into the stores, there is sufficient quantity onhand to cover both normal and abnormal consumption situations.4.Danger level: It is the level at which normal issues of the raw material inventory arestopped and emergency issues are only made.5.ABC Analysis: It is a system of inventory control. It exercises discriminating control overdifferent items of stores classified on the basis of the investment involved. Items areclassified into the following categories:A Category: Quantity less than 10 % but value more than 70 %B Category; Quantiy less than 20 % but value about 20 %C Category: Quantity about 70 % but value less than 10%6.Two bin system: Under this system each bin is divided into two parts - one, smaller part,should stock the quantity equal to the minimum stock or even the re-ordering level, andthe other to keep the remaining quantity. Issues are made out of the larger part; but assoon as it becomes necessary to use quantity out of the smaller part of the bin, freshorder is placed.

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