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MGT604 - Management of Financial Institutions - Lecture Handout 09

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Banking Surveillance Department

Health of an economy depends on the degree of safety and stability of its banking and financial system. A sound, stable, and robust banking and financial system is a pre-requisite for economic well being of a country and its populace. In Pakistan, ensuring the stability and soundness of the banking system is a statutory responsibility of State Bank of Pakistan. The banking supervision departments viz. Banking Policy and Regulations Department (BP&RD), Banking Surveillance Department (BSD), Off-Site Supervision and Enforcement Department (OSSED) and Banking Inspection Department have been assigned this important function to work jointly and severally to ensure the soundness of individual banks and of overall banking industry. The Department is responsible to supervise financial institutions in the country. The department ensures effective adherence to regulatory & supervisory policies, monitors risk profiles, evaluate operating performance of individual banks/DFIs & the industry as a whole while issuing guidelines for managing various types of risks. It also ensures that banks are adequately capitalized & have policies & systems in place to assess various risks. The department is also responsible for the implementation of the Basel II Accord in Pakistan. The function & activities of Credit Information Bureau also falls within the domain of Banking Surveillance Department. The CIB collect credit data,
under section 25A of the Banking Companies Ordinance 1962, maintain its database & disseminate credit information to financial institutions online to facilitate their credit appraisal process.

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MGT613 - Production / Operations Management - Lecture Handout 31

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Learning Objectives

Our discussion on Inventory Management would be complete only when we are able to learn and understand the types of Inventories and objectives of Inventory Control. This would ensure that we are able to understand the major reasons for holding inventories. We would be able to differentiate between independent and dependent demand. We will also learn the requirements of an effective inventory management system. We will review both periodic as well as perpetual Inventory systems. We will discuss in detail the ABC approach with a suitable example. Since our discussion would extend over three lectures we will also discuss the objectives of inventory management, describe the basic EOQ model, Economic Run Size, Quantity Discount Model with solved examples.

Types of Inventories

The five common types of inventories are:

  1. Raw materials & purchased parts.
  2. Partially completed goods called work in progress.
  3. Finished-goods inventories:
    • (manufacturing firms) or
    • merchandise, (retail stores)
  4. Goods-in-transit to warehouses or customers.
  5. Replacement parts, tools, & supplies.

Objective of Inventory Control

To achieve satisfactory levels of customer service while keeping inventory costs within reasonable bounds. Operations Managers are well aware of the fact that customer services with respect to Inventory takes into account both the internal customers as well as external customers.

Read more: MGT613 - Production / Operations Management - Lecture Handout 31