the profitability of the organisation 5.3 Techniques of Material Control The main techniques or the tools commonly applied to effect control over the material are following: 1. Determination of Stock Levels. 2. Economic Order Quantity or Reorder Quantity 3. ABC Analysis. 4. VED Analysis 5. Stock Verification 6. Inventory Turnover Ratio. 7. Just in time inventory system. 1. Determination of Stock Levels To avoid over-stocking and under-stocking each item of the inventory has the maximum levels, minimum levels and an order point. Re-ordering Level Re-ordering level is that point of level of stock of a material where the storekeeper starts the process of initiating purchase requisition for fresh supplies of those materials. This level is fixed somewhere between the maximum and minimum levels in such a way that the difference of quantity of the material between the re-ordering level and minimum level will be sufficient to meet the requirements of production until the fresh supply of the materials is received. It is also known as Ordering level", "Reorder point'. In other words, it is the level at which fresh order should be placed for replenishment of stock. Re-ordering Level Minimum Level + Consumption during the time required to get the fresh delivery According to Wheldon, Re-ordering Level Maximum Level Minimum re-order period. Practical Examples Practical Example 1 You are required to calculate the ordering level of material from the following particulars: Minimum Limit 1,0000 units. Maximum Limit 5,0000 units. Daily requirement of material 2000 units. Time required for fresh delivery 10 days. 523