ECONOMICS

Detailed explanation-1: -A business must maintain limited access to materials to have an effective control of materials. Purchase requisition form is prepared by the purchasing agent. Materials requisition form is used to notify the purchasing agent that additional materials should be ordered. EOQ increases when there is high demand.

Detailed explanation-2: -Material control in practice is exercised through periodical records and reports relating to purchase, receipt, inspection, storage and issuing direct and indirect materials. Proper control over material can contribute substantially to the efficiency of a business.

Detailed explanation-3: -Thus needs for material control to keep the materials cost at a minimum point cannot be over-emphasised. The objectives of material control are as follows: (i) To ensure availability of materials-There should be continuous flow of all types of materials” for efficient and uninterrupted flow of production.

Detailed explanation-4: -Materials control may be defined as a system which ensures availability of the required quantity of material of proper quality at the proper time and at the same time avoidance of unnecessarily blocking up of capital in stores.

Detailed explanation-5: -Minimum Total Cost: – There is a reduction in Total cost, which includes ordering and carrying costs, under the system of material control. 5. Avoids Wastages and Losses: – Wastages during the storage and usage of materials due to various factors is avoided to a great extent. 6.