Importance Of Inventory In The Hospitality Industry

CHAPTER – 1

1. INTRODUCTION

The term inventory also known as stock refers to the goods or materials or resources used by a firm for the purpose of production and sales. It also includes the material, which are used as supportive materials to facilitate production.

There are three basic types of inventory:

• Raw materials

• Work-in-progress

• Finished goods

Raw materials are the items purchased by firms for use in production of finished product.

Work-in-progress includes the items which are currently in the process of production. These are actually partly manufactured products. That is still in process to be considered as finished goods.

Finished goods consist of those items, which have already

It has come out into as an industry that is responsive to the needs and desires of people. The Hospitality industry is beneficial with the requirement of the peoples need and by fulfilling them. People look for a place where they can relax and can be free from the stressful life and this is why the roam around globally for peace and the increasing trend in earnings of the people are making them to spend for an luxuries tour globally. People who can effort are ready for a global tour whereas people with normal incomes are relaxing by roaming around in their country itself. International and domestic tourism, both is contributing to the income of hospitality industry.

2.1 Industry characteristics

Major characteristics of the Indian hospitality industry are:

• High seasonality

The Indian hotels have high demand in the month of April as well as October. During the month of April schools colleges are closed and people are ready to spend there vacation in a chilling place whereas in October most of the Indian occasions are falling and the culture of India is attracting tourism.

• Labour intensive

The demand of manpower is high in hospitality industry. We can find all kind of labours whether skilled, semi-skilled or unskilled in this industry.

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 It eliminates double work in ordering or in replenishing materials by centralizing the information’s.

 It gives a meaning for the locations and disposition or inactive and absolute item or stores.

3.8 METHODS OF VALUATION OF INVENTORIES

1. LAST IN FIRST OUT(LIFO)

This method deals as just reverse of FIFO method. It is based on the statement that the last purchased are the first material put in use. Thus the price of the last purchased material is the first materials purchased is used for all until from this batch have been issued after which the price of the previous batch of materials purchased is used.

2. FIRST IN FIRST OUT(FIFO)

In this process the assumption are that the resources are put in use consumed first which is purchased first and thus the resources in the store are the resources bought in the last. The FIFO process uses the value of first lot materials purchased for all production until all resources from this batch are finished.

3. SIMPLE AVERAGE METHOD

Simple average price is calculated by adding up all the dissimilar prices as resources in store as of which resources to be priced might be drawn by the no. of prices utilized in production this technique do not take in the account of quantities of material in store while calculating