Inventory Control Methods

Inventory costs incurred in connection with the procurement of supplies to meet consumer demand in accordance with the orders according to book - Management and Production, (2000:314) divided in several sections, namely:

Holding costs (carrying costs) or storage costs

The costs arising in connection with the storage of supplies. The magnitude of these costs varies sometime vary due to the activities of the company which can be adjusted with great small supplies stored.

The determination of the magnitude of this cost is based on a percentage of the value of the rupiah from inventory, which is included in this cost is the cost of trade (cost to rent a warehouse or storage fees), costs of warehousing facilities, maintenance costs (maintenance), costs insurance losses on theft, maintenance costs, insurance costs, depreciation expenses and tax costs are considered expenses.

Production changer cost (setup costs)

The costs incurred due to addition, subtraction production facilities as a result of the existing inventory is not in accordance with the needs of production and sales at a time when the included in the production costs change as the cost of overtime, dismissal of charges, the cost of training/training as well as the costs of unemployment. Generally, the costs of procurement of supplies difficult determined the amount for one production period so as to put into the setup costs.

Ordering costs

The costs incurred in connection with the booking of the raw materials up to into the warehouse company. The cost of this magnitude depends on the frequency of the booking, which is included in this cost is the cost of administration, the cost of purchasing and booking fees and freight loading and unloading cost acceptance as well as the cost of the examination.

Shortage costs

The shortage costs incurred as a result of the amount of supplies that are smaller than the number of requirements for the production process so that the company cannot meet consumer demand. In such circumstances will be booking a sudden contains many risks such as damage to the material so it should be sent back reluctantly issued additional charges.


The wisdom material raw material procurement request is part of the interest of some manager in a company. Investment management or inventory is not only related to the purchasing manager but also in touch with the manager of finance

The tends

Manager tends to purchase-oriented purchases in large quantities to obtain a discount or piece of supplier. So is the production manager wanted to retain a large amount of supplies to guarantee a smooth production process. Financial manager, while retaining small amounts of purchases for the sake of the efficiency of the use of funds.


For more details, the sense of Economic Order Quantity by Production Management, stated that in determining the need to produce a number of items so that planned for a certain period.

Control of RM

Control of raw materials is part of the interest on some manager in a company. It is important to keep no shortage of raw material that can cause harm to the company as it can fulfill the subscription or the consumer.

So on too the number of supplies although this has the kindness towards a smooth production process, but also raises the cost of storage is too big and can result in losses due to the possibility of damage to supplies excessive.

Assets Management

Overall assets and shortcomings this is needed, namely the availability of inventory quantities economically. This can be done when doing an economical reservation system called "Economic Order Quantity", in calculating the economic order quantity is considered two types of costs are variable, namely:

the cost of the booking, i.e. the costs incurred in connection with the booking of the raw materials. These fees vary in accordance with the frequency of the booking. The higher the frequency the higher the cost is also booking, otherwise the cost is inversely proportional to the amount/quantity each time the order means it will be the lower level of frequency.

Storage costs

the storage costs, i.e. costs incurred in connection with the storage of raw materials that have been purchased. This fee varies according to the amount of materials you ordered. The greater the materials you ordered will be even greater cost saving by booking fees.

What is ABC Inventory Control System

Precise Furniture Inventory Tracking