Production Planning and Inventory Control – Example

Production planning involves a decision of ‘quantity to be produced in future’ with efficient use of resources. It is an integrated plan across various functions of the organization. The following aspects are factored in the production planning process. a) Customer orders b) Production capacity / constraints c) Material requirement (including inventory levels, procurement plan and […]

Inventory Management – Economic Order Quantity

The primary objective of a good inventory management system is to keep the inventory costs to the minimum. The three major elements of inventory cost are as below: a) Ordering Cost b) Storage Cost (cost of carrying inventory) c) Stock-out Cost (cost of lost sales due to inventory shortages) Several inventory models have been built […]

Fundamentals of Management Accountancy

Management Accounting refers to accounting information that can help managers in a) Control of operations b) Planning c) Decision Making To appreciate the importance of Management Accountancy we need to understand its evolution which may be traced as follows: Cost Expenditure incurred to manufacture a product or provide a service. Responsibility Centers Responsibility Centers are […]

Management Accountancy – An Introduction

Management Accounting helps managers in answering many important questions which may not be answered by using Financial Accounting information. A few examples of such questions / problems are below A farmer has piece of land on which he can grow six varieties of tomatoes. He needs to decide within the limited available land which variety […]