PART 1: STUDY OF STORE-KEEPING PRACTICES, INVENTORY CONTROL AND MAINTENANCE OF VARIOUS RECORDS
COMPANY: Jamaica Urban Transit Company Limited (JUTC) or any other company within Jamaica can be used
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Interview a Purchasing Officer/Buyer and the respective storekeeper at JUTC, to elicit the following information. The following questions must be asked.
1) How does the Purchasing Officer know what materials are needed to be purchased?
2) Who is responsible for generating the requisition? What action does the Purchasing Officer take on receiving the requisition?
3) What are the procedures for purchasing materials? Comment on whether it is by direct purchase or through quotations.
4) Under what circumstances are quotations or tenders invited?
5) What are the procedures for receiving materials?
6) Where are the purchases entered/recorded and how are materials stored? Comment on whether cross docking is taking place.
7) What type of records are created, to know how much material is received and issued?
8) What are the procedures for issuing materials?
9) How are the levels of replenishment determined?
10) Why should there be a minimum and maximum level of stock maintained at the warehouse?
After ascertaining the records maintained at the accounts department, compute a list of ten to fifteen pieces of materials purchased by the company in the previous year.
1) List the items along with their annual usage and purchase price during the past year (Table 1).
2) These items are to be arranged according to annual dollar usage in the descending order.
3) Cumulative annual usage for all the items is to be calculated.
4) Calculate the cumulative annual usage up to the last item say the 31st,
15. Calculate the percent cumulative annual usage for all the items i.e., to 31st.
16. On the basis of percent of cumulative annual usage, categorize the items into A, B and C categories.
17) Calculate the percent of total number of items in each category.
18) Discuss which category of items are high usage value items and why more attention is to be paid towards such items.
Students are to take observation of the company’s decisions regarding inventory management and comment on its effectiveness. Items to cover may include:
I. How are items being ordered?
II. When are orders placed?
III. Are safety levels maintained to avoid undue stock out?
Table 1: Classification for A B C Analysis
S.No Annual Usage Cumulative Annual Usage %of annual Usage Cumulative annual % Categorization (A/B/C) EOQ