SELECTIVE INVENTORY MANAGEMENT TECHNIQUES - Working Capital Management

Selective Inventory Control Techniques

  • Selective inventory management techniques such as the A-B-C analysis or the analysis of U-E-D or the F-S-N analysis can help introduce efficiency. The logic behind this approach is that in any large number are usually have significant few and insignificant many.
  • Under the F.S.N. analysis, goods are classified into fast-moving, slow-moving and non-moving categories.
  • Under the V-E-D analysis, goods are classified into vital, essential and desirable categories.
  • Under the A-B-C analysis, goods are classified into most expensive i.e. A; next most expensive i.e. B and less expensive i.e. C.
  • Obviously, a firm can according to the circumstances obtained in it use a combination of these techniques to control and monitor inventories and to achieve the goal of working capital management.

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Working Capital Management Topics