Finance

Definition: The Motives for Holding Cash is simple, the cash inflows and outflows are not well synchronized, i.e. sometimes the cash inflows are more than the cash outflows while at other times the cash outflows could be more. Hence, the cash is held by the firms to meet the certain as well as uncertain situations. Motives for Holding Cash Majorly there are three motives for … [Read more...] about Motives for Holding Cash

Definition: The Cash Management is concerned with the collection, disbursement and the management of cash in such a way that firm’s liquidity is maintained. In other words, it is concerned with managing the cash flows within and outside the firm and making decisions with respect to the investment of surplus cash or raising the cash from outside for financing the deficit. The … [Read more...] about Cash Management

Definition: The Fixed Period Ordering is an inventory control system, wherein the order for the replenishment of inventory items is sent periodically or after a fixed time interval. It is also called as Fixed Period Deficit Ordering system, because every time the order is placed, the order quantity is different. Thus, fixed period ordering is a method wherein the firm places … [Read more...] about Fixed Period Ordering

Definition: The Fixed Order Quantity is the inventory control system, wherein the maximum and minimum inventory levels are fixed, and maximum and fixed amount of inventory can be replenished at a time when the inventory level reaches the auto set reorder point or the minimum stock level. In other words, an auto-reorders point is linked with the pre-fixed amount of inventory … [Read more...] about Fixed Order Quantity

Definition: A Computerized Inventory Control System is the integration of sub-functions involved in the management of inventory into a single cohesive system. It is software installed on the computer systems that enables a firm to keep a check on the inventory levels by performing the automatic counting of inventories, recording withdrawals and revising the stock balance. It … [Read more...] about Computerized Inventory Control System

Definition: The Outsourcing Inventory System is adopted by the firms to reduce the burden of manufacturing the components of the finished goods in-house i.e. within the organization. Thus, a system of buying the products or components from outside vendors rather than manufacturing internally is called as Outsourcing Inventory system. Many companies develop a single source of … [Read more...] about Outsourcing Inventory System

Definition: The Just-in-Time or JIT is an inventory management system wherein the material, or the products are produced and acquired just a few hours before they are put to use. The Just-in-time system is adopted by the firms, to reduce the unnecessary burden of inventory management, in case the demand is less than the inventory raised. The objective of Just-in-time is to … [Read more...] about Just-in-Time System

Definition: The Three-Bin System is like a two-bin system, wherein the third bin of inventory is reserved with the supplier. In other words, a manufacturing firm keeps a stock of inventory in two bins, and at the same time, the supplier of the inventory will keep one bin reserved at his location. The Three-bin is built on the concept of Kanban system, a system used by the … [Read more...] about Three-Bin System

Definition: The ABC Inventory Control System is applied by those firms that have to maintain several types of inventories. Ideally, it is not desirable to keep the same degree of control over all the inventory types, since each vary in terms of its value of annual consumption. Thus, the ABC Inventory Control System is used to determine the importance of each item of the … [Read more...] about ABC Inventory Control System

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.   Following are … [Read more...] about Inventory Control System