Stock control is a planned approach of determining what to order, when to order and how much to order and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sales.
Inventory control basically deals with two problems:
- When should an order should be placed? (Order level)
- How much should be ordered? (Order quantity)
These questions are answered by the use of inventory models. The scientific inventory control system strikes the balance between the loss due to non-availability of an item and cost of carrying the stock of an item. Scientific inventory control aims at maintaining optimum level of stock of goods required by the company at minimum cost to the company. Stock control is a mechanical procedure, which helps in implementing an inventory policy.
Control procedures are devised to implement the desired inventory management policies. Procedures for inventory control can either be perpetual or periodic. In a perpetual control process, inventory status is reviewed daily in order to determine the needs of replenishment. To ensure proper implementation of this system, there is need to have accurate accountability of all stock keeping units, apart from proper computer assistance. In a periodic review, the inventory status of an item is reviewed at regular time intervals, maybe weekly or monthly