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CHAPTER 8
Inventory:
A complete list or statement of the stock of all materials, parts,
components, work-in-progress and/or finished goods in possession
of an organisation at a point in time. For stock control purposes,
particularly of raw materials, an enumeration of goods received,
issues effected and balance at hand is done on a day to day basis
or at period intervals, as part of efficient inventory and stores
management. For balance sheet purposes the usual approach
is to take stock of inventories and evaluate them at the end of an
accounting year. However, the practice of a perpetual inventory
system, indicating day to day changes, is now used more and more
for better financial control. See also stock.
Inventory carrying
costs:
Monetary cost of holding stocks. These consist of:
(a) Interest on blocked capital.
(b) Cost of handling the materials.
(c) Storage or warehousing costs.
(d) Premium on insurance (for theft, fire, etc.).
(e) Deterioration.
(f) Obsolescence.
Inventory control:
A functional aspect of inventory management, which seeks to ensure
that stocks of rawmaterials, parts and components are at an optimal
level that is neither too low in relation to expected usage, not so
high as to increase avoidable holding costs. See alsoABC inventory
control, Economic order quantity (EOQ), Order point control.
Joint tender:
A tender/offer submitted by a group of companies and/or individuals
which have formed a grouping (consortium) to tender for and (if
awarded) implement a specific project. One lead company has to
represent and act on behalf of all other members of the consortium
towards the buyer. Nevertheless each member of the consortium
remains jointly and severally liable for the fulfillment of the tender
and implementation of the contract.
Knocked Down (CKD):
Articles when procured as parts and in unassembled form are
referred to as in knocked down condition.
Late bid:
A tender/offer received after the closing time and date indicated in
the tender issued. In most cases returned unopened to the tenderer.
Latent defect:
A defect in a product that is normally difficult to notice visually or
through ordinary and reasonable inspection and which becomes
apparent in the course of its use.
GLOSSARY