Inventory refers to the goods and materials that a business or firm holds for the purpose of resale. It is necessary to keep inventory as it can be demanded any time by the customer. But it does not end here, along with keeping inventory or stock, it is also necessary to determine how much stock a business can keep or maintain and how much stock already exists. To determine the quantity of inventory a system is followed which gives information about whole inventory or stock. That system is known as inventory control system.

An inventory control system refers to a process or way of managing and locating objects or materials. It helps the company to have an overview of all aspects of managing inventory, purchasing, shipping, receiving, tracking, warehousing and storage, turnover and reordering.

Some of the important techniques of inventory control system are: setting up of various stock levels, preparation of inventory budget, maintaining perpetual inventory system, establishing proper purchase procedure, inventory turnover ratios and ABC analysis.

Setting up of various stock levels: This refers to setting up maximum level, minimum level, re-order level, danger level, average level of materials to be kept in store in order to avoid over-stocking and under-stocking.

Preparation of Inventory budgets: Budget helps to work effectively and efficiently. In organisations where material requirement is huge in quantity purchase budgets are prepared.

Maintaining perpetual inventory system:This is also known as automatic inventory system. Its objective is to provide information about the quantity and value of stock of each item.

Establishing proper purchase procedure: A proper purchase procedure should be established and followed to ensure availability of inventory in time.

Inventory turnover ratio: This shows the rate at which inventory is being used. It indicates the efficiency of material management.

ABC analysis: This is used to have effective...