Inventory Control Manager Interview Preparation Guide

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A inventory should be taken at least once a year. If items are perishable, seasonal or highly demanded a inventory should be taken more often.

Yes, In the market today there are many computer software packages that can compute forecasted demand for goods held in inventory.

EOQ stands for Economic Order Quantity.

Yes, through the use of forecasts inventory levels can be set to meet the demands while keeping levels as low as possible.

Forecasting is the process of estimating the future demand of a product.

No, the model only works for those cases that meet its assumptions.

Are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions.

A order point is a point in time at which a order is placed to replenish goods in inventory.

Demand is the quantity that customers are willing to buy. Demand can be found through forecasting and is needed to find the EOQ level.

An order quantity is the amount of goods that an order requests be shipped to the store.

There are two types of forecasting qualitative and quantitative. Qualitative uses personal opinions to determine forecasts. Quantitative uses numerical data and statistical modeling to determine forecasts.

Lead time is the period of time from which a order for goods is placed until it is received by the store. Lead time is an important consideration for determining when orders should be placed.

Yes, a discount will cause the basic EOQ model to fail. To use a discount in determine a EOQ you must use the EOQ model with quantity discounts.

The EOQ formula is the square root of 2 times demand times order completion cost divided by carrying cost. The mathematical formula is square root of 2DS/C.

Inventory levels and their values can affect the income of the store, the amount of taxes paid, and the total stocking cost.

I am a stickler for perfection and organization. In addition to this, I possess great leadership qualities which make it easy for me to direct personnel to do their job properly. Possessing knowledge of accounting procedures makes it easy for me to manage related bookkeeping and budget management tasks.

Interference is a factor in forecasting demand. Interference is made up of all the factors that a forecaster has no control over. Factors that may be considered interference include natural disasters, unusual customer demands, or rare events in the business period.

A cycle count is an inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day. Cycle counts contrast with traditional physical inventory in that a full physical inventory may stop operation at a facility while all items are counted at one time.

It helps to see the difference between Actual stock and Book Stock. Book Stock is the stock available in the system.

Working as an inventory specialist, I am required to develop and implement an overall inventory management plan which includes materials procurement, inventory stock levels, and facility needs and personnel management. Additionally, I am required to provide direction to staff members who handle inventory control and make sure any overstocking or shortages are handled in a time efficient manner.

At the beginning of a reporting period, or after a cycle count, the stock available in your inventory account is the Opening Stock. It is also called as Beginning Inventory.

So, there's an Opening Stock. Then, lots of transactions happens - Items are purchased and Sold. And finally Closing Stock is calculated.

Closing stock is the amount of inventory that a business still has on hand at the end of a reporting period. This includes raw materials, work-in-process, and finished goods inventory. The amount of closing stock can be ascertained with a physical count of the inventory. It can also be determined by using a perpetual inventory system and cycle counting to continually adjust inventory records to arrive at ending balances.

Closing Stock is an asset. In Inventory Account, it is under debit. In trading Account, it is under credit. Because, it is still not traded.

The letters in the formulas represent the quantity ordered(Q), the carrying cost of a unit(C), the demand for the units(D) and the cost of completing a order(S).

The EOQ works if its four assumptions match the case it is used on. The assumptions are: A. Annual demand, carrying costs and ordering costs can be estimated. B. Inventory level is divided by 2, no safety stock, goods used uniformly and are gone by next order. C. Stock-out, customer responsiveness and other costs not considered. D. No quantity discounts.

In garment exporting, pricing of garments are mostly quoted on FOB (Free On Board). Free on board(freight on board) price means a price which includes goods plus the services of loading those goods onto some vehicle or vessel at a named location which i put in parenthesis. FOB (Source port) does not includes the shipping charge and Insurance. Where as FOB(destination) includes shipping charges and insurance cost.

Landed Cost is the total cost of a product once it has arrived at the buyer’s door. This list of components that are needed to determine landed costs include the original cost of the item, all brokerage and logistics fees, complete shipping costs, customs duties, tariffs, taxes, insurance, currency conversion, crating costs, and handling fees. Not all of these components are present in every shipment, but all that are must be considered part of the landed cost.

Clearly it is advantageous to reduce the cost of each or any component of landed cost. Each one will allow the seller to lower the final selling price or increase the margin associated with that sale.

Last Cost = FOB + Costs levied on landing.
Margin taken = Sales Cost - Last Cost.

Times for reordering goods vary dependent on the control system you use and its lead time. In fixed order quantities reorders should be placed when the safety stock is reached. In fixed period systems the reordering is done at set time periods. In just in time systems reordering is based on matching the demand with supply. For just in time a close watch on inventory levels is needed so that reorders are placed before goods are out of stock.

☛ A cross-functional team or
☛ Only production planning or sourcing managers?
Several factors impact effective inventory planning. For example, marketing campaigns can play a role alongside sourcing. So a cross-functional team should set production and ordering schedules. Production alone determines lot sizes, usually based solely on minimizing production costs. By weighing all factors and using a sales and operations planning process (S&OP), cross-functional teams often reduce the company's replenishment stock by 50 percent and ensure that the right products are available for big promotions.