Definition: The Inventory control system is maintained by every firm to manage its inventories efficiently. Inventory is the stock of products that a company manufactures for sale and the components or raw materials that make up the product. Hence, an inventory comprises of the buffer of raw material, work-in-process inventories and finished goods.
- ABC Inventory Control System
- Three-Bin System
- Just-in-Time (JIT) System
- Outsourcing Inventory System
- Computerized Inventory Control System
- Fixed Order Quantity
- Fixed Period Ordering
There are several inventory control systems that are in practice, and these range from simple system to a complex one depending upon nature and the size of the business operations. Talking about the simple system, several small manufacturing firms operate a Two-Bin System; wherein inventory is stored in two bins. Once the inventory in one bin is used, and the order is placed, meanwhile, the inventory from the other bin is used by the firm.
This system is quite inadequate for the larger firms that deal in several product lines and maintain a heavy sales counter. Thus, self –operating or an automatic computer system is to be employed to keep track on the inventory stock and place the order in case of a shortage.