Pakistan study notes for Matric, Intermediate, B.A, B.COM BSC, M.A, BCS. Free Pakistani Urdu educational school, colleges and University notes.



The following are the types of control.

1. Production Control

2. Inventory Control

3. Quality Control

4. Financial Control

5. Management Control


1. Production Control

For a manufacturing concern production is the main and prime function. Much amount of capita) is invested in it. Therefore, it s necessary that excessive or short production should he avoided. To achieve optimum level the following functions should be followed in sequence.


(i) Planning

Production planning involves receiving order from a customer, breaking down into its component parts such as raw material, work-in-process, and finished part. Then it is decided what parts to be purchased and what parts to he fabricated.


(ii) Routing

It determines the operation to be performed. It sets sequence of production. It also determines the flow of materials through a series of operation. Routing involves the preparation of route sheets, route charts, and route files to facilitate smooth operation in a sequence.


(iii) Loading

It assigns the work to a machine, department or process.


(iv) Scheduling

It determines time-table through which each operation will take place. A master schedule is prepared showing the number of products to he ready each week or month. Schedule for purchases requisitions are also made.


(v) Estimating

It decides in advance the expected cost of a job or product.


(vi) Dispatching

It is the actual ordering of work to be performed leading to the release of the work order and to start production.


(vii) Expediting

It is a follow-up set up. It ensures that the plans are actually being executed. Elaborate controls may also he set up. Scheduled performance reports are made by the production control department.


2. Inventory Control

Inventory may be composed of’ three types of materials:


1. Raw materials

2. Works in progress

3. Finished products

The purpose of inventory control is to trim the excessive and to make up the shortage of inventory. Good inventory control is responsible for:

1 Optimum level of inventory.

2. Economics size of each order for material to be purchased.

3. A proper record system informing the present level of inventory.


Inventory involves capital expenditure. It requires special attention so that excessive or short stock of materials and merchandise can be avoided or controlled.


Disadvantages or Hazards of Excessive Inventory

1. Capital is unnecessarily blocked with no return on it.

2. Company will lose if the prices of the purchased stock fall.

3. Should e fashion change, the excessive stock will go out of date and will have to be sold at slashed price or at a loss.

4. In the case of new inventions, new substitutes or competition, the company with the excessive stock will suffer the most.

5. Carrying and maintenance charge increase the cost of’ business. Cost of storing materials includes insurance, risk, rent, handling, recording, and interest expenses.


Hazards involved in Short Inventory

1. The demand of customers cannot he fulfilled.

2. If the prices rise the company will lose and will be compelled to repeat purchase at a higher rate.

3. Continued shortage compels customers to abandon business dealings with the firm.

4. Unexpected large orders cannot he met.

5 Small sized purchases do not yield high commissions, discounts and other economies.



Factors of Optimum Inventory

1. The volume of safety stocks to he determined to avoid shortages that interrupt production.

2. Consideration of economy in purchase.

3. Expected price changes in future.

4. The expected volume of production and sale.

5. The operating cost of carrying inventory.

6. The cost and availability of capital.


3. Quality Control

Quality control ensures the uniformity and standard of quality. Specific tests are made to determine whether the product is the correct size (variation not greater/smaller than 1/1000 of an inch), or is strong, hard, or durable according to requirement. Statistical methods and probability they are used. Samples are frequently taken to determine the quality. Substandard products are rejected.


4. Financial Control

Its purpose is to ensure the safety of capital. Financial controls include budgets, accounting statements, ratio analysis, break- even analysis and return on investment. Details of these type controls are given in the budget section in this chapter. Financial control is a part of financial management that determines sources and looks to uses of funds.


Management Control

Like other things are controlled management and managerial activities such as decision making, plans and putting them into effect. This type of control ensures the quality of management in terms of preparation of efficient and accomplishable plans, their execution, and maximum output with a minimum input.


Management control may be:

(i) Direct control

(ii) Indirect Control


Direct Control

Direct control implies to develop better managers who will skillfully apply principles and thus eliminate undesirable results caused by poor management.

it involves the fixation of the responsibility on individual managers for inefficiency, negative deviations, and poor performance. It ensures whether managers act in accordance with the preset standards, plans, and principles and head their team toward the accomplishment of goals.

Direct Control Principle is based on Four Assumptions:

(1) Qualified and proficient managers do not make many off takes.

(2) The performance of managers is measurable.

(3) Management principles can be applied in measuring the performance of managers.

(4) Application of management principles can be analyzed.


Direct Control Through Key-Areas

Quality of management can be determined and evaluated by looking up the key-areas of the company. These are as follows:


1. Market image of the company.

2. Company’s productivity and overall performance.

3. Fixed and current assets of the firm.

4. Financial resources.

5. Product innovation and development.

6. Hum-n resources and organization.

7. Profit position.

8. The extent to which social responsibility is met.



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