UNIT - 2 INTRODUCTION TO OPERATIONS MANAGEMENT

Work Study: Work study is one of the most important management techniques which is employed to
improve the activities in the production. The main objective of work study is to assist the management in
the optimum use of the human and material resources.
Definition: Work study refers to the method study and work measurement, which are used to examine
human work in all its contexts by systematically investigating into all factors affecting its efficiency and
economy to bring forth the desired improvement.

Definition: The systematic recording and critical examination of existing and proposed ways of doing
work, as a means of developing and applying easier and more effective methods and reducing cost it is
also called motion study.
Work Measurement:
Definition: Work measurement is the application of techniques designed to establish time for a qualified
worker to carry out a specified job at a defined level of performance.
Work study has two parts, Method Study and Work Measurement. Method study deals with the techniques
of analysing the way to do a given job better, Work Measurement seeks to measure the time required to
perform the job.
Basic procedure for Method Study:
Select: The work to be studied
Record: All the relevant facts of the present or proposed method study by observation
Examine: The recorded facts critically everything that is done, considering in turn, the purpose of the
activity, the place where it is performed, the sequence in which it is done, the person who is doing it and
the means by which it is done.
Develop: The most practical, economical and effective method considering all the circumstances.
Define: The new method so that it can always be identified. Install: The method as standard practice
Maintain: That standard practice by regular routine checks.
Recording: The current process of doing the job has to be recorded, while doing so every detail however
small it may be, has to be identified.
Where the process is too long, involving many stages of production, inspection or transportation, the
present process of doing the job is recorded sufficiently together with all the relevant information, using
the process chart symbols.
Recording Techniques: The recording techniques are of three types
a) Process chart b) Diagrams c) Motion and film analysis d) Models

A) Process Charts:
1. Outl ine process chart: This chart outlines the main events sequence wise considering only
operations and inspections in the given job

Ex: TASK: Changing refill of a Ball Point pen

Chart begins: Unscrew the cap
Chart ends: Screw the cap
Chart by : --------------
Chart Ends : --------------
B) Diagrams:
1)Flow diagrams: Flow process chart only shows the sequence of various activities necessary for
performing the specified work. It does not show clearly the path of movement of men and materials from
one location to another.
Definition: It is a diagram, drawn to scale, intended to show the relative position of the production
machinery and marks the route followed by the machines, materials and men.
2)String diagrams: The workers are moving at irregular intervals between a number of points in a
working area with or without materials in many industrial activities.
Definition: The string diagram is a scale plan or model on which a tread its used to trace and measure the
path of workers, materials or equipment during a specified sequence of events.
3)Cycle graph: In this method a small electric bulb is attached to each part of the body, which makes
the movement for carrying out an operation. The path of movement is photographed by high-speed
camera.
4)Chrono cycle graph: This is a photographic record, which traces the path of movement onto a
photographic place. In principle, it is similar to the string diagram, and is most effective when recording
short, rapid movements.
C)Micro motion Study and film analysis: Micro motion study is a set of techniques intended to divide
human activity into groups of movements or micro motions (therbiligs) and the study of such movements
help to find for an operator one best pattern of movements that consumes less time and requires less effort
to accomplish the task.
Film analysis: Once the activity has been filmed and the film processed, a projector runs the film very
slowly and the film can be stopped or reversed whenever required.
1) SIMO Chart (simultaneous motion cycle chart): A SIMO chart is based on film analysis; it is a
graphic representation of the coordinated activities of an operator’s body embers. The activities are
described in terms of basic or fundamental motions. The time required for completion of these motions is
also recorded on the chart.
D)Models: Sometimes the picture of the existing conditions is not clear by the use of flow process chart
or flow diagram. In such cases instead of the scales plans of the shop facilities models are used to provide
visual representation of the proposed layout before proceeding with actual rearrangement of the work
place.
Work Measurement: Work measurement is the application of technique to establish the time for a
qualified worker to carry out a specified job at a defined level of performance.
Procedure for Work Measurement:
1)Sect: The work to be studied and determine the objectives of the study
2)Record: All the relevant data relating to circumstances in which the work is being done, the methods to
be used breakdown the job into its elements
3)Examine: The recorded data and the detailed breakdown critically to ensure the most effective method
and motions are being used and that unproductive elements are separated from productive elements.
4)Measure: The time required to complete each element using the appropriate work measurement
techniques and calculate the time required to compete the work cycle which is known as basic time.
5)Compile: The standard time for the operation or work place, in case of stop watch time study the
various allowances to cover relation, personal needs etc. are added to the basic time to estimate the
standard time.
Techniques of work measurement:
1.Time study
2.Synthesis from standard data
3.Predetermined Motion Time System (PMTS)
4.Analytical estimating
5.Work Sampling
1)Time study:It is defined as the art of observing and recording the time required to do each detailed
element of all industrial operation.
Time study equipment: Time study equipment can be broadly grouped two categories
A) Time measuring device B) Time study boards and time study chart
A) Time measuring devices:
a) Stop Watch b) Motion picture camera c) Time recording machine d) Electronic timer.
a) Stop Watch:
i) Decimal minute stop watch: In this type of watch the movements is started and stopped by moving the
slide “A”, forward and backward respectively are complete revolution of large hand represents 1 minute
and since the dial is divided into 100 parts reading to within 0.01 minutes can be obtained. Every time the
large hand makes one revolution the small hand will register 1 minute and is able to register up to 30
minutes.
ii) Decimal hour stop watch: The dial in this watch is divided into 100 parts. The needle completes 10
revolutions in one hour. The least count in this watch is
0.001 hours. The small dial of this watch is divided into 30 equl spaces (representing 0.01 hour) and the
small needle makes 31/3 revolutions in one hour.
b) Motion picture camera: Every element of the operation involving motion of the workers is made into
film through motion picture camera when this film is run at a slow speed through a projector; the time of
each element is recorded using a stopwatch.
c)Time recording machine: A moving tape is run is this machine at a uniform velocity of 10
inches/minutes with the help of electric motor. The machine has two keys: one key, when pressed,
indicates starting of an operation, and the other key used to take a print on the scaled tape at the end of
elements.
d)Electronic timer: The timing of starting and ending of an operation of an element is automatically
recorded through electronic timers.
B) Time study boards and time study charts:
Time study board: These are simple and handy hard wood boards equipped with stopwatch holders and
clamps for holding the observation sheets and time study forms. These boards help to see and record the
observation and time at the same instant.
Observations forms: Printed or cyclostyled forms are used for recording the observation during that time
study. It ensures that time study are made in a

standard manner and that no essential data are omitted. These forms are attached to the study board by
means of clip provided
2)Synthesis from standard data: This one technique of work measurement to obtained synthetic times
that are synthesis from element times previously obtained from direct time studies. The analysis and
measurement stage are thus conducted prior to the actual study.
3)Predetermine motion time system (PMTS): Every element of work is composed of some
combination of basic human motions. Apart from mental activity all works can broken down into
elements that usually a fundamental movement of the body or body members. After this analysis stage the
basic motions that have been isolated have a time allotted to them on the basis of predetermine motion
times.
4)Analytical estimation: Analytical estimating serves as best for measuring work. In the analysis stage
we find the usually these basic elements or much larger as compared to the elements in PMTS or time
study. For measuring stages the time, which will be occupied by the element at a specific speed of
working is estimated.
5)Work Sampling: It is work measurement technique which large number of instantaneous observations
are made random interval over a specified period of time of a group of workers, machine and processes.
Each observation records what is happening at that instant and the present observations recorded for a
particular activity or delay is a measure of the percentage of time during which that activity or delay
occurs.
It can also define as a method of finding the percentage occurrence of a certain activity by statistical
sampling and random observations.
Procedure for conducting time study: For conducting time study average workers and average
machines are selected. This study id conducted by the time study expert, who should be familiar with all
the information related to the job and the conditions in which it is being done.
Time study is performed in the following stages.
A) Analysis of work B) Standardization of methods C) Making time study
A) Analysis of work: It includes all the tasks performed by the workers, not just the effective work. In
the end, time required for job preparation, cleaning of machine, etc. should also be included.
B) Standardization of methods: Related to materials, equipment, tools, working conditions to ensure an
acceptable method which is easy, safe and the fastest.
C)Making time study: Time study is done on a printed time study record sheet, which is fixed on a board
known as time study board. On one corner, a stopwatch is placed.
Different time readings of element are recorded in the corresponding column of the record sheet. Several
sets of reading are taken to arrive at an accurate result after noting all these readings, average tome is
calculated, neglecting abnormal values, if any.
Standard time: it is the time, which is taken by a normal worker for a specific task or job, working under
moderate conditions and including other allowances. Such as fatigue setting of tool and job, repairing of
tool and checking of job etc
Standard time is the basis for the calculation of wages and incentives.
Standard time= Average time* Rating factor+ other allowances
Rating factor: the study engineer multiplies actual time with a factor known as Rating factor or levelling
factor to set the average time which a normal worker would take. This is expressed as a percentage of the
effacing of representative operator, which is in comparison to some of his average fellow workers

STATISTICAL QUALITY CONTROL

Introduction: Quality is the determining factor the success of any product or service large resource are
committed in every organization to ensure quality
Definition: It is defined as customer satisfaction in general and fitness for use in particular. Both the
external consumer who buy the product and services and the internal consumers that is, all divisions or
departments of the business organization are equally interested in the quality.
Statistical quality control: The process of applying statistical principles to solve the problem of
controlling the quality control of a product or service is called statistical quality control.
Quality elements: a) Quality design b) Quality conformance
a) Quality design: Quality of design refers to product feature such as performance, reliability durability,
ease of use, serviceability
b) Quality conformance: Quality conformance means whether the product meets the given quality
specification or not
Inspection: The process of measuring the output and comparing it to check whether it meets the given
specified requirements or not, is called inspection.
Inspection Methods: The following are the methods of inspection based on merits
1) Incoming inspection: In this method, the quality of the goods and services arriving into the
organization is inspected. This ensures that the material suppliers adhere to the given specifications with
this defective material cannot enter into the production process. This focuses on the vendor’s quality and
ability to supply acceptable raw materials.
2) Critical point inspection: Inspecting at the critical points of a product manufacture gives valuable
insight into the completely functional process. At the points of manufacture that involve high costs or
which offer no possibility for repair or rework, inspection is crucial further operation depend on these
results critical point inspection helps to drop the defective production, and thereby, facilitate avoiding
unnecessary further expenditure on them.
3) Process inspection: This is also called patrolling inspection or floor inspection or roving inspection.
Here the inspector goes around the manufacturing points in the shop floor to inspect the goods produced
on random sample basis from time to time.
4) Fixed inspection: It provides for a centralized and independent where work is brought for inspection
from time to time. This method is followed where the inspection equipment cannot be moved to the
points of productions.
5) Final inspection: This is centralized inspection making use of special equipment. This certifies the
quality of the goods before they are shipped.
Elements of statistical Quality Control: The technique under SQC can be divided in to two parts
a) Process control b) Acceptance sampling
a) Process control: Process control is a technique of ensuring the quality of the products during the
manufacturing process itself. If a process consistently produces items with acceptable or tolerable range
of specification. It is said to be statically under control. Process control is achieved through control charts.
Process control aims to control and maintain the quality of the products in the manufacturing process.
Statistical control charts: A control chart compares graphically the process performance data to
computed statistical control limits. These control limits act as limit lines on the chart control chats are the
tools to determine whether the process is under control or not.
The quality of the production process may be affected by chance cause or assignable cause.
Chance cause: such causes, which may or may not affect the manufacturing process are called chance
cause, chance cause cannot even be identified. It is not possible to always maintain the given
specification.
Assignable Cause: Assignable causes affect the quality of the production process. These causes can be
identified and specified. Causes such as change in the labour shift, power fluctuations, or excessive tool
wear are said to be assignable causes as they affect the quality of manufacturing process in different ways.
Process capability: Process capability refers to the ability to achieve measurable results from a
combination of machines, tools, methods, materials and people engaged in production.

Confidence limits and control limit:

Confidence limit: It indicate the range of confidence level. A confidence level refers to the probability that
the value of measurement or parameter, such as length of screw, is correct.
Ex: If a component is required with measurement of 50 mm. across, then the buy accept all components
measuring between 48 mm and 52 mm across, considering a five percent confidence level.
Control limit: Control limits are found in the control charts. There are two control limits
1) Upper control limit (UCL) and 2) Lower control limit (LCL). These are determined based on the
principles of normal distribution
Ex: In a pilot investigation of the length of the nails produced in the shop floor, it is found that the mean
length X is cm, the S.D 3σ, the measure of variability of the nails produced 0.2 cm. How do you construct
the control chart for this data.
Control charts for variables: A variable is one whose quality measurement changes from unit to unit. The
quality of these variables is measured in terms of hardness, thickness, length, and so on. The control charts for
variables are drawn using the principles of normal distribution. There are two types of control charts for
variables x

X and R chart.
X and R Chart: The X chart is used to show the process variations based on the average measurement of
samples collected. It shows lighter on diagnosing quality problem when read along with R chart. It shows the
erratic or cyclic shifts in the manufacturing process. It can also focus on when to take a remedial measure to
set right the quality problems. However, collecting data about all the variables involves a large amount of time
and resources.
The R chart is based on the range of the items in the given ample. It highlights the changes in the process
variability. It is a good measure of spread or range. It shows better results when read along with the X chart.
Control charts for attributes: The quality of attributes can be determined on the basis of ‘Yes’ or ‘No’,
‘Go’ or ‘No go’. In other words, in case of a mirror glass, even if there is one scratch it is not considered
to be a quality mirror, in such a case quality is decided base on whether the mirror has any scratch or not.
The control charts for attributes are ‘C’ chart and ‘P’ charts ‘
C’ Chart:
‘C’ chart is use where there a number defects per unit. This control charts controls the number of defects
per unit. Here the sample size should be constant. This calculates as below.
‘P’ Chart: ‘P’ Chart is used where there is date about the number of defectives per sample. It is also
called fraction defective chart or percentage defectives chart. Here each item is classified on ‘go or no go’
basis that is good or bad. Hence if the sample size is larger, the results could be better.
Acceptance Sampling: Acceptance sampling is a technique of deciding whether to accept the whole lot
or not based on the number of defectives from a random drawn sample.
It is widely use in buying food products, such as rice, wheat etc. Before buying the random samples
drawn from the bags of say rice are tested. If the quality of sample drawn looks good or free from defects
then according to the requirement the entire bag or part of it can be brought
The process of acceptance sampling through operating characteristic curve (OCC)

MATERIALS MANAGEMENT
Definition of Materials: Materials refer to inputs into the production process, most of which are
embodied in the finished goods being manufactured. It may be raw materials, work-in-progress, finished
goods, spare parts and components, operating supplies such as lubricating oil, cleaning materials, and
others, required for maintenance and repairs.
Definition on Material Management: Material management deals with controlling and regulating the
flow of materials in relation to changes in variables like demand, prices, availability, quality, delivery
schedules etc.
Objects of materials management:
1.Minimization of materials cost s
2.To reduce inventory for use in production process and to develop high inventory turnover ratios.
3.To procure materials of desired quality when required, at lowest possible overall cost of the country.
4.To reduce paper work procedure in order to minimize delays in procuring materials.
5.To note changes in market conditions and other factors affecting the concern.
6.The purchase, receive, transport, store materials efficiently
7.To reduce cost, through simplification, standardization, value analysis etc.
8.To conduct studies in new areas e.g., equality consumption and cost of materials so as to minimize cost
of production.

Function of Materials Management:

1.Materials planning and programming
2.Purchasing materials inspection of materials
3.Inspection of Materials
4.Classification, codification and standardization in stores
5.Storage of materials
6.Issuing of materials
7.Maintence of proper inventory records
8.Materials receiving
Inventory: It defined as a comprehensive list of movable items which are required for manufacturing the
products and to maintain the plant facilities in working conditions.
Inventory Control: The systematic location, storage and recording of goods in such a way the desired
degree of service can be made to the operating shops at minimum ultimate cost.
Objectives of Inventory Control:
1.To support the production departments with materials of the right quality in the right quantity, at the
right time and the right price, and from the right supplier
2.To minimize investments in the materials by ensuring economies of storage and ordering costs
3.To avoid accumulation of work in process
4.To ensure economy of costs by processing economic order quantities
5.To maintain adequate inventories at the required sales outlets to meet the market needs promptly, thus
avoiding both excessive stocks or shortages at any given time
6.To contribute directly to the overall profitability of the enterprise
Functions of inventory control:
 To develop policies, plans and standards essential to achieve the objectives
 To build up a logical and workable plan of organization for doing the job satisfactory
 To develop procedure and methods that will produce the desired results economically
 To provide the necessary physical facilities
 To maintain overall control by checking results and taking corrective actions.

Inventory Management System or Level:

The objects of inventory control are to establish level of inventory which will serve to minimize the
company’s costs and maximize its revenue.
It is determined by five basic variables
a) Minimum inventory b) Reorder point c) Recorder quantity d) Procurement lead time
e) Maximum inventory.

a) Minimum inventory: Minimum inventory or buffer stock is needed to take care of any temporary
unpredictable increase in the part usage or in the procurement lead time.
b) Reorder point: It is sufficiently above the minimum inventory to allow for issuing the purchase order
and for delivery by a vendor. Reorder point stock level is equal to the minimum stock plus the expected
consumption during the procurement lead time.
c)Reorder Quantity: This is the fixed quantity of item for which order is placed every time the stock
drops to the reorder point. This quantity is fixed either on the basis of experience or calculated.
d)Procurement lead time: This comprises the time required for preparing the purchase order, the time
gap between placing an order and receiving supplies and time required for inspection etc.

e) Maximum inventory: It is approximately the sum of the order quantity and minimum inventory. It
will exactly equal the sum of these two quantities if the ordered material is received just when the
minimum stock is reached.

ABC Analysis: ABC analysis is a technique of controlling inventories based on their value and
quantities. It is more remembered as an analysis for ‘Always Better Control’ of inventory. Here all items
of the inventory are listed in the order of descending values, showing quantity held and their
corresponding value. Then, the inventory is divided into three categories A, B and C based on their
respective values.

A – Refers to high value item

B – Refers to medium value item
C – Refers to low value item
A category comprises of inventory, which is very costly and valuable. Normally 70% of the funds are tied
up in such costly stocks, which would be around 10% of the total volume of stocks. Because the stocks in
this category are very costly, these require strict monitoring on a day-to-day basis.
B category comprises of inventory, which is less costly. Twenty percent of the funds are tied up in such
stocks and these accounts for over 20% of the volume of stocks. These items require monitoring on a
weekly or fortnightly basis.
C category consists of such stocks, which are of least cost. Volume- wise, they form 70% of the total
stocks but value-wise, they do not cost more than 10% of the investment in the stocks. This category of
stocks can be monitored on a monthly or bi-monthly basis.

The following table summarizes the concept of ABC analysis

Category Value (%) Volume (%) Desired Degree

of Control

A 70 10 STRICT

B 20 20 MODERATE

C 10 70 LOW

Economic Order Quantity (EOQ): Economic order quantity is defined that quantity of materials, which
can be ordered at one time to minimize the cost of ordering and carrying the stocks. In other words, it
refers to size of each order that keeps the total cost low.
Inventory costs: The inventory costs can be classified into two categories,
1)Inventory ordering cost 2) Inventory carrying cost.

Inventory Ordering Costs (Co): The cost refers to the cost incurred to procure the materials
particularly in large organizations, these costs are significant. This is also called as procurement cost.
Definition: It is the cost of placing an order from a vendor. This includes all costs incurred from calling
for quotation to the point at which the item is taken into stock.
Ex: Receiving quotations, Processing purchase requisition, receiving materials and then inspecting it,
follow up and expediting purchase order, Processing sellers’ invoice.
Inventory Carrying cost: Carrying cost which are also known as holding costs are the costs incurred in
maintaining the stores in the firm. They are based on average inventory and consist of:
Ex: Storage cost includes: Rent for storage facilities, Salary of person and related storage expenses,
Cost of insurance, Cost of capital
Ex: A biscuit manufacturing company buys a lot bags of 10,000 bags wheat per annum. The cost per bag
is Rs.500 and ordering cost is Rs.400. The inventory carrying cost is estimated at 10% of the price of the
wheat determine EOQ and number of orders required per year.
Method of pricing the materials issued:
It is necessary to value the stocks at the end of the accounting period. These are different methods
followed in different industries at different points of time for this purpose. .
The Methods are:
1.First in First out (FIFO)
2.Last in First out (LIFO)
3.Simple average price method
4.Weighted average price method
First in First Out (FIFO): In this system, the materials first received are issued first materials from the
second lot are issued only, when first lot is exhausted and so on. The prices of the materials are charged at
the cost at which that lot was purchased.
Last in First out (LIFO): In this system, the materials first received are issued first materials from the
second lot are issued only when first lot is exhausted and so on. The prices of the materials are charged
at the cost at which that lot was purchased.
Simple average price method: In this method, the stock is issued at an average price. The average price
is determined by dividing the sum of the prices (at which the goods are received) by the number of price
available.
Weighted average price method: This method is an improvement over simple average price. While
calculating the average price, the quantities of each of the receipts are considered. The weighted average
price is calculated as given below:

Where W1, W2, and W3 refer to the quantities of each of the three receipts and P1, P2, and P3 are the
prices of each of the receipts. Under this method, the quantity of each of the receipts is called the weight.
Hence, the average price so computed is called the weighted average price. Weighted average is
calculated after each time a purchase is made.
Purchasing: It deals with investment, overheads dealing with other and also result in server losses mass
production industries that requires large purchasing for a continues flow of materials, demand for an
efficient purchase decision. It implies procurement of raw materials machinery, service etc. needed for
production and maintenance of the concern.
It has several benefits in terms of reduced costs, higher inventory turnover, buying the materials at the
best prices, turnover, buying the materials at the best prices, continues supplies, reduced lead time and so
on.

Objectives:
1.To procure right material
2.To procure materials in desired quantities
3.To procure material of desired quality
4.Purchasing from reliable source
5.To pay less for materials purchased
6.To receive and deliver materials at right place and time.
Purchasing process:
The following are the logical steps in the purchasing process:
1.Requisitioning purchases
2.Exploring sources of supply
3.Issuing of tenders and obtaining quotations
4.Opening of tenders and quotations and preparation of comparative statement
5.Negotiating over the purchase price and terms of supply
6.Placing purchase order
7.Receiving of materials along with the invoice
8.Checking inward invoice
9.Inspecting and testing materials
10.Forwarding the materials to stores
11.Checking invoice and passing of bills for payments
Stores Management: It deals with planning, coordination and control of various activities pertaining or
effective efficient and economic storage and store keeping.
Store: Generally, un worked material is known as store Storage: The store room is the place where stores
are housed
Storage: Storage is meant holding in custody all kinds of stores and materials semi-processed and fully
processed products.
Store Keeping: It may be defined as that aspect of materials control concerned with physical storage of
goods.

Functions of stores:
1.To receive raw materials, semi-finished or purchased items from vendors and to check them for
identification.
2.To receive parts and components which has been processed in the factory?
3.To make a record of material receipt and current status of material in the store
4.To maintain positioning of materials in the store.
5.To maintain stock safety and in good condition to ensure that they do not suffer from damage
6.Issuing the items/materials to operational personnel
7.Making a record of receipt and issue slips
8.To avoid illegal attics in store areas.
9.To plan for optimum utilization of space.
10.Cooperating to full extent which purchasing, manufacturing and production planning and control
departments.
Stores Records:
Material requisition note: Whenever the materials are required by a department/section, this form has to
be filled in. This note provides information about the job number, description of the items required in
terms of number. The head of the department/section should authorize it. Whenever the materials are
issued, the receiving person should sign the note.
This is to be entered in the materials issued record, which is to be signed by the storekeeper.
Purchase order: The purchasing officer will release the purchase order. The following is the format of a
purchase order. Here, we find Vivek enterprises placing a purchase order on Business Solutions Ltd., for
the following materials. The terms and conditions of the purchase order such as delivery, payment, and
other have to be mentioned clearly.
Invoice: Invoice is a statement sent by the seller to the buyer mentioning the particulars of the goods
supplied, net amount payable for the goods, and the terms and conditions governing the sale. It is very
important document because it shows the net amount payable by the buyer after all the discounts and the
taxes, if any.
Goods received note: The goods received note furnishes the particulars of the suppliers, purchase order
number, purchase requisition number, and the job for which the goods are received. These details are to
be certified by a competent authority. On this basis, the accounts department initiates the process of
payment for the goods received.
Goods returned note: Sometimes, a part or whole of the goods received may not be of acceptable
quality, and hence, these have to be returned to the supplier. In this context, the goods received note is
prepared. This is also called the ‘debit note’ because the suppliers or creditors’ account has to be debited
by the amount mentioned in this debit note for the goods returned.
Stores ledger account: This is maintained to provide the details of the quantity, price and amount of the
receipts, issues, and balance of stocks on a day-to-day basis. At any given time, the physical quantity of
stocks should match with the balance as per the store’s ledger account. A separate account is maintained
for each type of the material in the stores. It should necessarily mention the method such as FIFO or
LIFO, followed to value the issues of stocks. It is a valuable tool for the costing department in exercising
stores control. It facilitates the valuation of stock from time to time.
Bin card: Bin card is the slip or tag attached to the bin where the goods are stocked. Whenever the
materials are received or issued, an entry is made on the bin card. The purpose of bin card is to reveal the
particulars of the quantities received, issued, and available as on a given date at a glance. Where separate
bins are maintained for each item of the store, each bin will have a tag hung to it.