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Ordering cost:
Ordering cost covers cost of originating an
indent, calling of quotations, processing
tenders, placing the order, verifying the
invoices and payments.
Composition of buying cost can be
grouped as under:
Purchase:
- Cost of inviting quotations and fixing
most
suitable supplier for item.
- Cost of preparing and placing order.
Expediting & Miscellaneous costs.
-
Expediting cost
Other Misc. Cost.
Set- up Cost
Set-up Cost
When inventory control refers to manufactured
item, corresponding cost is set up cost.
Every time a production run is taken up, there
is loss of machine time, operator time etc.
which is included in set up cost. Set up cost
also includes cost of paper work, inspection,
etc. involved with every production run.
Set up cost increases when the batch size are
smaller and the number of batches is large.
Each firm has to calculate its own stockout costs for different items.
For example:
Another machine may have spare capacity to
take up load.
- Then only reduction in production can be
taken as stock out cost.
- Then stock out cost will only be cost of
stopping and restoring work.
1. CEMENT
02 to 03 months
2. STEEL
09 months
3. OTHERS (VIZ. PIPE,
PIPE FITTING
09 Months
CABLE ETC.)
b) O&M STORES
1. COAL
15 days for all Projects
except BTPS & NCTPP
2. FUEL (EXCLUDING COAL) OS
shall fix inventory holding levels
station-wise
18 Months
24 Months
06 Months
03 Months
year)
06 Months
arising
(Min. two
disposals in a