CHAPTER I: INTRODUCTION

1.1 Background of the Study:

Nepal is highly synchronized country in term of geography, ethnicity, language and

culture. Nepal is bounded by the Tibet region of China on the north and India on the

south, east, and west. It was cut off from the rest of the world until the early 1950s, when

a palace revolution and the subsequent overthrow of the autocratic Rana dynasty marked

the beginning of Nepal’s emergence into the modern world. Geographically, the country

is divided in three reasons: Mountain, hill and terai. There are 5 development reason and

75 administrative. Districts are further divided into smaller units called Village

development committee (VDC) and Municipality. The Himalayas cover the northern

third of the country from east to west, bordering china to their south lies a long east-west

stretch of lower mountains (the hilly reason) whose southern flanks flatten into the Terai,

a fertile, sub tropical plan spanning the border with India.

With in short span of time Nepali Supermarkets has growth significantly both in terms of

business volume and the size of markets. After the establishment of Supermarkets Nepali

business house is expose different type of product.

Self-service stores that are the predominant type of retail outlet for food products in the

Nepal. An average supermarket handles thousands of edible items including meat, fresh

fruits and vegetables, dairy products, canned groceries, bakery items, delicatessen, and

frozen foods. Some also carry items such as seafood and liquor. Non edibles found in

supermarkets include household cleaners, paper products, health and beauty aids, and

house wares. The markets are located in shopping centers, neighborhood areas, business

centers, and along highways.

Moreover, the general consumer appeal of the supermarket concept—large size, self-

service, variety of merchandise, one-stop shopping, ample parking, and low prices

ensured their growth. The building of such stores in suburban areas was important in the

development of the retail complexes that came to be known as shopping centers, or malls.

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1.1.1 Introduction to Inventory Management System

1.1.1.1 Definition

Inventory Management is an enterprise-wide discipline concerned with the identification

and tracking of Information Services (IS) hardware and software assets. Its three main

areas of concern are:

 

i) Acquisition

ii) Redeployment

iii) Termination

Figure 1.1. Asset Management phases and operations

Source: www.dcag.com

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i) Acquisition procedures are established to assist personnel in procurement of software

and hardware products. Its main purpose is to ensure that proper justifications are

performed and that financial guidelines are followed. Acquisitions require “Purchase

Orders” to track and authorize the purchase, while the actual installation of equipment is

performed by the Infrastructure or Facilities Management Department. Once added to

the environment, a Master Inventory record is created to describe the newly added

equipment and its components Inventory records can be used to calculate the resale

price of existing equipment, when planning for an upgrade / replacement or reduction in

size.

ii) Redeployment procedures are responsible for ensuring that assets are tracked when

moved from one location to another and that budgetary considerations are adjusted as

needed. Should a product be moved in from its original owner, then the Inventory

System is updated to reflect the new location and owner. In this case, the old product is

deleted from the original owner's budget and added to the new owner's budget. If

equipment is being deployed from one person, or location, to another, then a data wipe

operation must be performed to insure that sensitive business, personal and/or medical

information has been deleted. If data wiping procedures are not performed in accordance

to Department of Defense standards, then the company is open to legal and civil penalties

as defined in a number of laws. Redeployment requests can generate transportation

activity (pick-up and delivery of equipment), facilities management activity

(disconnecting device, data wipe, reconnecting device, etc.), inventory management

update, and service activities associated with the device(s) being moved.

 

iii) Termination is responsible for deleting the asset from the inventory when it is

discontinued, or replaced. The owner's budget will be updated to reflect the asset

termination and the asset will no longer be listed when location reports are generated.

Whenever equipment is being terminated (even if for donation to charities or employees)

a data wipe operation must be performed to eliminate any sensitive information from the

hard drive. Additionally, a certified vendor must be utilized to insure that the computers

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components are disposed of in an environmentally friendly manner. This scrapping

process must be certified, so that legal and civil penalties are no longer the responsibility

of the terminating firm but rather the scrapping organization

1.1.1.2 Purpose of Inventory Management

Inventory management must tie together the following objectives, to ensure that there is

continuity between functions:

• Company’s Strategic Goals

• Sales Forecasting

• Sales & Operations Planning

• Production & Materials Requirement Planning.

Inventory Management must be designed to meet the dictates of market place and support

the company’s Strategic Plan. The many changes in the market demand, new

opportunities due to worldwide marketing, global sourcing of materials and new

manufacturing technology means many companies need to change their Inventory

Management approach and change the process for Inventory Control.

Inventory Management system provides information to efficiently manage the flow of

materials , effectively utilize people and equipment, coordinate internal activities and

communicate with customers. Inventory Management does not make decisions or

manage operations; they provide the information to managers who make more accurate

and timely decisions to manage their operations.

Traditional Supply Chain solutions such as Materials Requirement Planning, Inventory

Control, typically focuses on implementing more rapid and efficient systems to reduce

the cost of communicating information between and across the Inventory links in the

SCM.COM focuses in optimizing the total investment of materials cost and workload for

every Inventory item throughout the chain from procurement of raw materials to finished

goods Inventory. Optimization means providing a balance of supply to meet the demand

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at a minimum total cost , Inventory level and workload to meet customers service goal for

each items in the link of Inventory Chain.

It is strategic in the sense that top management sets goals. These include deployment

strategies (Push versus Pull) , control policies , the determination of the optimal levels of

order quantities and reorder points and setting safety stock levels . These levels are

critical, since they are primary determinants of customer service levels.

Keeping in view all concerns, the latest concept of Vendor Managed Inventory is used to

optimize the Inventory. We are entering into VMI (Vendor Managed Inventory), Annual

Rate Contracts with manufacturers or their authorized dealers, who maintain Inventory on

our behalf and supply the items as and when required.

VMI reduces stock-outs and optimize inventory in supply chain . Some features of VMI

include:

• Shortening of Supply Chain

• Centralized Forecasting

• Frequent communication of inventory, stock-outs and planned promotions

• Trucks are filled in a prioritized order , e.g. items that are expected to stock out have

top priority then items that are furthest below targeted stock levels then advance

shipments of promotional items

Despite the many changes that companies go through, the basic principles of Inventory

Management and Inventory Control remain the same. Some of the new approaches and

techniques are wrapped in new terminology, but the underlying principles for

accomplishing good Inventory Management and Inventory activities have not changed.

The Inventory Management system and the Inventory Control Process provides

information to efficiently manage the flow of materials, effectively utilize people and

equipment, coordinate internal activities, and communicate with customers. Inventory

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Management and the activities of Inventory Control do not make decisions or manage

operations; they provide the information to Managers who make more accurate and

timely decisions to manage their operations.

The basic building blocks for the Inventory Management system and Inventory Control

activities are:

•Sales Forecasting or Demand Management

•Sales and Operations Planning

•Production Planning

•Material Requirements Planning

•Inventory Reduction

The emphases on each area will vary depending on the company and how it operates, and

what requirements are placed on it due to market demands. Each of the areas above will

need to be addressed in some form or another to have a successful program of Inventory

Management and Inventory Control.

Inventory is usually a distributor’s largest asset. But many distributors aren’t satisfied

with the contribution inventory makes towards the overall success of their business:

• The wrong quantities of the wrong items are often found on warehouse shelves. Even

though there maybe a lot of surplus inventory and dead stock in their warehouse(s),

backorders and customer lost sales are common. The material a distributor has committed

to stock isn’t available when customers request it.

• Computer inventory records are not accurate. Inventory balance information in the

distributor’s expensive computer system does not accurately reflect what is available for

sale in the warehouse.

• The return on investment is not satisfactory. The company’s profits, considering its

substantial investment in inventory, is far less than what could be earned if the money

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were invested elsewhere the system integrates the idea to manage the inventory

automatically; meanwhile it can generate sales report, inventory report, etc. To users, the

system can provide instant information about all inventory items. Therefore users who

manage stock level can immediately solve any shortage problems, since the system

provides easy-to-use interface for users to see inventory levels. By recording daily sales,

the system updates inventory constantly with the help of database management system

running as the back end.

Fig 1.2 Arrangement structural design

Source: compiled field survey 2010

1.1.1.3 Inventory Management Present: 

1. Up-to-date information about data processing resources through the creation and

archiving of records in a centralized repository.

2. Financial records specific to a single component, or groups of components.

3. Component Status Indicators to identify a component as Active (A), Redeployed

(R), Donated (D), or Terminated (T).

4. Component Criticality definition (1-5, with 1 being most critical).

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5. Service records for all components in the inventory.

6. Data used to support configuration diagrams of the hardware and software

components contained within specific locations, or the entire data processing

environment.

The mission of an Inventory Management System is to provide a Central Asset

Repository of information used to define assets and relate the asset to its; owner, location,

and relative importance. This information will provide personnel with data needed to

support their job functions, for example:

Facilities Management will be able to plan Heating, Ventilation and Air

Conditioning (HVAC) requirements, as well as power and floor space needed to

support equipment listed in Asset Repository for a specific location. To also perform

the functions needed to adhere to legal, environmental, business, and regulatory

requirements associated with equipment redeployment and termination.

Financial Services will be able to budget for asset procurement, depreciate assets

over time, and complete tax documents. A report of equipment and their resale value

can be used to aid in planning equipment upgrades and to reduce the “Total Cost of

Ownership” associated with equipment.

Contracts Management will be able to negotiate vendor discounts and enterprise

agreements. Additional vendor agreements may be required to support transportation

and warehousing, equipment service and reconfiguration requirements, data wipe

services and products, buyers, and scrap dealers.

Contingency Planning personnel will be able to develop recovery plans for

mainframe and office assets contained within the Inventory System, based on the

assets relative importance (as stated within the Criticality field). Surplus equipment

may be utilized to support recovery operations, if needed.

Technical personnel will be able to resolve problems more quickly with the

information contained within the Inventory System, because they will have a listing

of the assets contained within a location. BSM have the IMS should be integrated

within the everyday functions performed by personnel associated with entering and

maintaining asset information. The system will reduce the effort devoted to asset

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management, while supplying many personnel with the information they need to

perform their functional responsibilities.

1.2 Introduction to the Organization

In just 25 years Bhat-Bhateni has grown from a ‘single shutter’ 120 sq. ft. cold store to

become the leading supermarket and departmental store chain in Nepal, and the highest

tax payer in the sector for the last five consecutive years with more than 10,000

customers daily.

There are currently two stores conveniently located in central Kathmandu and

Maharajgunj, and a further five stores are due to open in the next three years in

Kathmandu and across Nepal.

Pictures 1.3 Building of BBSM

Bhat-Bhateni Head Office Bhat-Bhateni Maharajgunj branch office

Bhat-Bhateni offers a full range of 90,000 products from 500 local and international

suppliers, including a wide range of groceries, fresh fruits and vegetables; a broad range

of leading international liquor, toiletries and cosmetics brands; and an extensive choice of

kitchenware, clothing, sports, toys and electrical items. Furthermore, both premises

include excellent value jewellery stores that offer a wide range of gold and silver

ornaments in both traditional and modern styles.

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Bhat-Bhateni stores offer a unique shopping experience for customers in Nepal following

the international ‘hypermarket’ format. The ground floor offers a wide range of fresh

food and vegetables and a broad range of leading international Liquor, Toiletries and

Cosmetics brands. The remaining floors offer a wealth of choice including Kitchenware,

Clothing, Sports & Toys and Electricals, with convenient escalators and air-conditioning

on all floors. The Maharajgunj superstore includes a shirting & suiting service and a

promotional area to display carefully selected promotions. In addition, furniture &

fixtures is a new exciting offering being introduced in 2009 in both stores. Both premises

benefit from the co-location of an excellent value jewellery stores that offer a wide range

of gold and silver items in both traditional and modern ornaments.

1.3 Area of the Study

The Inventory Management discipline encompasses all system and data network elements

from the mainframe to the server level throughout the enterprise.

All mainframe and data network based hardware and software assets must be identified

and entered into the Inventory System. Any changes to these environments must be

reflected in the IS.

Financial and technical product information must be available through the Inventory

System, as needed to support the functional responsibilities of personnel within the

finance and contracts management departments.

Asset criticality must be included with asset descriptive and financial information, so that

the Recovery Management department is supplied with the information it requires.

Recovery actions must be implemented to safeguard critical assets.

Asset status must be included in the Inventory Management system, so that the

component can be serviced in adherence to legal, environmental, business, and industry

requirements. This process should be used to drive the facilities management department

via form routing when components change status from active to redeploy, donate, and

terminate, of scrap. An audit trail of activities associated with equipment status changes

and associated actions must be maintained to certify actions and eliminate legal and civil

exposures.

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1.4 Issues to be Address/ Question to Answered

Efficient processing and operations management start with an integrated approach that

links all facets of system management together. Inventory Management is just one of the

disciplines. Each augments the other, and provides the ability to effectively manage a

large systems environment.

 The products and tools that comprise the Inventory Management System use data, Vital

Product Data, local configuration definitions and in some cases, discovery applications to

arrive at inventory information.

A lack of such data affects the other Systems Management disciplines ability to function.

Following are the research question for the study:

1. What is the main objective of the Bhatbhateni supermarket on wholesale lending?

2. What kinds of challenges/ issues specially the problem on the thief?

3. What is the criterion for providing CC camera?

4. How is the internal controlling system on IMS?

5. In which way organization attempting to extent for profit enhancement?

6. What is the share of retail lending in total stock provided by the supermarket? 

1.5 Objectives of study

The general objectives of report writing mainly comprise: enhancing the conceptual as

well as analytical knowledge related with Bhat-Bhateni supermarket and their operating

procedures, to obtain a practical knowledge about various organizational procedures and

policies regarding the supermarket sector. Ultimately the report focuses on “inventory

management system at Bhatbhateni supermarket”. The other objectives of the report

writing are as under.

1. To analyze the inventory management process of BBSM

2. To carry out the Inventory Management Data Model of BBSM

3. To understand the Collecting, Monitoring and Reporting Data of the organization

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4. To study the Interfaces Business Function and System Management Interfaces

during the inventory management system

5. To calculate the Economic Order Quantity of BBSM

6. To understand the terms and condition applied by supermarket for retail provide.

1.6 Need of the Study

As the age of 21st century supermarket is the fundamental part and package of the

economic system of any country. Nowadays nobody visit different place for different

item purchase but everybody keep it with the supermarket. How much the supermarket

system and facilities of market is developed within the country determines the economic

development of the country. The first and basic need of revision this topic about

“Inventory management system” is for the component of course requirement of degree of

BBA program, “Field Report Writing” carrying 100 marks. So in this field report writing

I focused on the supermarket sector for following reasons:

1. It is significant to identify all the products and product appearance supermarket to

analyze the inventory management system.

2. For providing general operation about the operation of the Bhatbhateni supermarket

and for future reference for conducting more research

3. It is required to know the stock size of different fiscal years to make the relative study

among the stock volumes and show the falling and increasing trends.

4. The information about the target market helps to recognize the customers and

consumers of the product of BBSM.

5. On the basis of suggestion and recommendation of the study, the corporation

managing director can take actions for improving the performance.

6. For achievement of necessity of 5th semester of BBA according to Purbanchal

University Curriculum

  

1.7 Organization of the Study

1.7.1. Overall Organization of the Study

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The generally report is divided into three chapters. In the first chapter, the historical

background of the BBSM, introduction of the BBSM, services offered, organizational

chart, marketing strategy etc of the BBSM is presented. The second chapter is concerned

with the inventory management system about the number of customer visit by the

company for previous five financial years where trend line & bar-charts are used. Lastly

third chapter provides the summary, conclusion and recommendation of the overall field

visit.

1.7.2 Research methodology

Research methodology present to the various sequential steps to accept by a researcher in

studying .A systematic method is required to pick out an actual result for any type of

study. Similarly, in this report also, there is certain method used. In this report, for the

data collection method, both the primary as well as secondary information has been used.

The first step of the collection of necessary information and data from related field that is

the collection from BBSM .the task will be fulfilled by the collection of secondary data,

from various published information and oral speeches. Data designing is an overall

framework outline of plan for performing the study. In this study analytical research and

design will be used for clearing the situation on the basis of presented data and analyzed

systematically under specific major heading so as to meet objective of the study. On the

other hand the accumulated data is explained analyzed and tabulated systematically. To

achieve the objective of the study descriptive design has been used.

8 day field survey was conducted on 13 February, 2010. The questionnaire survey was

conducted among the

Data Collection

Information required for the study was collected from the corporate department of

BBSM. Concerned personnel of the respected department were in contact. Both the

primary and secondary sources of data were collected for the preparation of this report.

Primary Data: The field data sheets and Questionnaire schedule were prepared for the

collection of primary information. It is done by using following methods:

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Field observation : Learned through observation and spending too much time in

BBSM

Questionnaire method: I conducted questionnaire survey to get further

information about IMS. A total of 15 individuals were interviewed with the pre-

designed questionnaire schedule Occasional discussion with manager, staffs and

other concerned officials were also done. Prepared several questionnaires and

conducted several interviews with the appointed person of the respected field.

Maintaining interpersonal relationship Visited the BBSM in order to have an

relationship with different aspects of the supermarket

Group discussion method Met with the staff and had direct contact with them

for relevant information. Informal discussion with the staffs of the supermarket

Secondary Data

Publications & journals( the boss, business age )

Information’s from BBSM. Directives

Collecting information from Google

Information from website of BBSM website ( bbsm.com.np)

www.Dcag.com/

financial management book (van horne and wachowicz ,fundamenral of financial

management )

1.7.3. Limitation of the Study

i) Corporate policy

BBSM is accurate to its customers. The supermarket maintains the faith of its customers

and was not ready to leak out valuable information even to its interns for any kind of

publication. Thus, maintaining its secrecy policy.

ii) Resource constraint

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Since there was lack of imitative in this field, no solid survey has been conducted as such

we as interns could have conducted extensive survey in the fields. However, due to

resource constraints we were not able to do so.

iii) Time constraint

Apart from the research constraints, I needed ample time for conducting an extensive

research and survey which could not be possible due to our time constraint of our exam.

Exam is knocking our door, and we should be ready for open it. I had to spend a month

in the field gathering some first hand experience of supermarket

iv) Competitive edge

In today’s cut-throat competitive market, information is money and all the companies

have realized this fact and would think twice before giving away any valuable formation.

Thus, we had limited information gathering and our research and report suffers some

information insufficiency.

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CHAPTER II: PRESENTATION AND ANALYSIS OF

DATA

2.1 Inventory Management Process

Within the system area changes to the physical environment are systematically reported

through the integrated change process. This discipline incorporates all hardware and

software reconfigurations or updates. All inputs to the centralized data base will be

subject to the change process. The following two diagrams illustrate an overview of the

Inventory Management process and the Flow Diagram of the Inventory Process

respectively.

Figure No. 2.1: Inventory Management Process

PROCESS INPUTS:

Service Level Management, Capacity and Performance Management,Change Management, Problem Management, Batch Management,On-Line Management, Recovery Management

NewAcquisition

AssetRe-Deployment

AssetTermination

NetworkAlert

SystemRe-Configuration

InventoryRepositoryData Base

Data Center Record,System Record,Hardware Record,Software Record,Service Record,Financial Record.

System ManagementAssurance Process

On-Line Viewing Add / Delete / Edit

R/O R/W Reports

Hard Copy, orvia on-line Display

ToConfiguration Management

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Source: : www.dcag.com

2.2 Inventory Management Data Model

Figure 2.2 Inventory Management Data Model

Data CenterRecord

SystemRecord

HardwareComponent

ServiceRecord

SoftwareComponent

HardwareFinancialRecord

SoftwareFinancialRecord

Features Features

Inventory Management Data Model

Source: compiled field survey 2010

The following items are required from asset sources to support an integrated

Configuration Management approach.

 1. Data Center Record: This record contains on-line information about the data

processing centers, the system name, location codes, emergency phone numbers,

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managers, and contact names. The software and hardware components and system

records will refer to this record.

 2. System Record: This record contains information relative to each processing system

within the processing center. This record should contain the system names by LPAR,

location codes, operator names, and support numbers. Software and hardware

components can refer to this record.

 3. Service Record: This record contains the service organization’s data. Maintaining

service organization records is advantageous when a user is displaying a record of a

failing component. This record should contain the name, location, prime-shift phone

number, off-shift phone number, hardware and software representative’s name, and

contact phone numbers, and a description of the service organization. Hardware and

software components can refer to this record.

 4. Financial Record: Helpful information in this record assists in warranty and service

incidents. Hardware financial records contain a user financial id, a financial type, and a

description. For software records the same information is required in addition to a

license type record entry.

 

5. Hardware Component: For hardware component records a consensus must be

reached on the hardware types to be managed. A hardware model record for each

hardware type will be created and all common hardware components will be entered

using this template. This record should contain the following information: 

Component ID

Product Number

Serial Number

Generic device type

Model

Manufacturer

Owner

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Install Date

Location

Maintenance Vendor

Contract type

Component status

Component Criticality

Component description

6. Software Components: For software component records a consensus must be

reached as to what level of installed software will be within the scope of the asset data

base. For example, is the workstation (PC-based) software to be managed? If so, are

we to account for all application software or just operating system software? The answers

to these questions are linked to what kind of information the user support groups require

to provide service to the client. In a centralized Help Desk environment, all user

application software, including maintenance levels, are maintained. This provides up-to-

date information to the Help Desk personnel about the user environment and adds greatly

to their productivity.

 A software model record for each component contains an ID, maintenance level,

program type, status and a description. A typical software record should contain the

following information: 

System (application runs on)

Product Number

Name

Model

Vendor

Serial Number

Renewal Date

License Type

Contract Type

Maintenance Level

Description

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 7. Feature Components Record: This record identifies associated features and relates

these features back to other records.

 8. Model Component Record: The industry uses this type record as a productivity tool

to greatly enhance the ability to build large data bases quickly with minimum data entry

errors.

 Model records themselves do not hold configuration data, but they make the entry of

data easier by allowing the creation of component records from models that hold

information common to a number of components (or subcomponents) of the same type.

 The model capability also provides the ability to build one or many relationships

between model features and hardware or software components. Features that are

common to many components can be contained in a single model feature record that is

referred to by many component records.

 

2.3 Collecting, Monitoring and Reporting Data

2.3.1 Collecting Data

The Record Hierarchy in the following diagram indicates that component records refer to

data center, system, service, and financial records. These four records are informational

components. This means they must be created prior to creating the component records

(hardware, software). It saves time because these records must be defined before they

can be referenced in component records. This allows you to establish connections as you

create the records.

 2.3.2 Monitoring and Reporting Data

Once the inventory data base has been built it will be used to satisfy the following

requirements

Determine bypass and recovery procedures when a failing component has been

identified.

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Determine the level of a component, and also other components that are affected

when a problem occurs.

Establish relationships between a component and any problem or change record in

the data base.

Search for any components meeting specific characteristics, such as all terminals

in a network and the locations to which they are assigned.

Generate reports on specific configuration information, including but not limited

to the following:  

- Hardware or software components with related features,

- Physical inventory by location,

- Hardware and software configuration maps, and

- Service reporting for maintenance contracts, warranty, and invoice

tracking.

2.4   Business Function Interfaces

Some of the more common business functions that interface with Inventory Management

include:

Purchasing: This resource manages all information systems requirement

identification through the procurement process. Inventory Management provides

input to Purchasing in terms of system and network standard asset information.

Accounts Receivable / Payable Department: This function collects usage data and

bills information System (I/S) expenses to the appropriate users. It supports

accounting, budget planning, tracking of project costs, and other activities. Inventory

Management provides financial records as input to the Accounts Receivable / Payable

process and vice versa. This two-way interface occurs with the approval and

submittal of billings for payment.

I/S Management Committees: These groups investigate tools and services to

provide policy information and translate that data into recommendations for I/S

productivity improvements and services. Inventory Management will provide input

to these groups in terms of product standards and technology strategies.

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Strategic Planning Committees: These groups deal with long-range planning and

the integration of I/S objectives with the business objectives of the enterprise.

Inventory Management provides an interface to Strategic Planning by providing

insight into device migration patterns, trends, and direction, and the Strategic

Planning Committees provide information back to the disciplines as well.

Security Department: This function manages the registration or enrollment of

people and programs to access controlled I/S resources. Inventory Management

provides input about device configurations and security interfaces to this functional

area.

User Support Groups: Since these groups are responsible for their equipment

acquisition, they must be compliant with the inventory process. Tracking the

acquisition of network and computer equipment at the local level can be difficult

without their full participation. To ensure accountability of such purchases, provisions

should be made for a periodic physical inventory of such groups to ensure a level of

inventory integrity.

Client Support Services: These groups define the services that will be needed to

support the I/S clients within the enterprise. Within Services Management are two

key areas:

 

1. Help Desk - This area provides a single point of contact for clients to request services

and obtain resolutions for problems.

 

2.  Service Level Planning - this area identifies the agreement between the I/S

organization ad the user community that defines the level of service. The service level

agreement is also used to define policies for operations and performance management.

2.5 System Management Interfaces

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The Inventory Management discipline is dependent upon various disciplines and

functions within the enterprise in achieving its objectives. These disciplines and

functions and the assumptions related to their tasks are listed below:

Change Management: Coordinates the various tasks performed in configuration

change and testing across the data processing environment. Any changes to the I/S

environment that affect Inventory Management are input from this discipline.

Problem Management: Assists the I/S organization in locating, identifying, and

resolving inventory problems. The Problem Management discipline will provide

input to Inventory Management as problems arise that require changes to resolve

conflicts.

Facilities Planning: Required to participate in the Problem or Change process as they

pertain to the physical environment and is accountable for any actions required to

comply with the inventory management process. It is essential that this group

provide input to Inventory Management and vice versa, to ensure changes in physical

asset configurations are noted.

2.6 Distribution in retail sector

Bhatbhateni supermarket provides sell that product which is out of fashion, out of date,

damage, off-season product, festival scheme. Some product are return which is

possible .and some product which is sold to small store

Table of Retail lending

SELLS SELLING PERCENTAGE

sell on full price 78 %

sell on discount 22 %

Source: compiled field survey 2010

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Source :Table 2.1

In the above chart we can see that 78% of the total sell on full price, and only 22% of

total product are sell on discount at off-season , out of fashion, damage out and off date

.This shows that BBSM is more active controlling product than could not on loss .

2.7. Functional areas

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Retail Lending Percentage

sell on total price 78%

sell on discount price22%

sell on discount

sell on total price

All of the functional areas listed below can utilize the information contained within the

Inventory Management System's Central Asset Repository of information. Additionally,

the Recovery Management area could utilize inventory information to identify an assets

criticality (especially when the asset's location and owner are identified within the

Inventory Management System). Through the use of reports generated from the

Inventory Management System's Repository, it would be possible to obtain a listing of all

"Most Critical" resources, by location and group. This report would then serve as the

basis of a Business Recovery Plan.

 The functional areas that interface with an Inventory Management System are:

Figure 2.7.1: Overview of Inventory Management

Inventory Management Departments

Inventory Management

Mainframe Mid-Range PC / LAN Communications Fixed Assets

Hardware

Software

Facilities

Vendor

Financial

Voice Data Network

Finance

Common areas of concernfaced by each department

Contracts

“ Inventory Management is divided into many separate areas of responsibility.”

Source: compiled field survey 2010

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2.8 SWOT ANALYSIS OF BBSM

Table 2.1: SWOT Analysis of BBSM

STRENGTH WEAKNESS

Efficient and effective advance

sanctioning procedure

Professional attitude among the

employees

Efficient customer service and

marketing about retail lending

Competitive interest structure

Effective credit appraisal system

Less loss in case of default

Continuous innovative approach

Good brand image and strong

brand loyalty among its customers

Technologically driven facilities

to its customers

Lack of diversified product

Less competitive interest structure

Hassles in loan sanctioning

procedure

Brand awareness is still just

medium

Lack of proper research and

development

Did not cover all group of

customer in this sector

Lack of market coverage in rural

areas

Lack of good advertisement

strategies

OPPORTUNITIES THREATS

High market coverage whith in

kathmandu

Increasing trend of Nepalese

people moving in taking credit for

individual purpose

Low level income of the people

Unstable political and economic

conditions

Frequent change in BBSM

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Best way to gain customer

satisfaction by fulfilling the dream of

their customer

directives and regulatory policies

High competition in marketing

industry.

Other small super market coming

up with similar services

Source: compiled field survey 2010

2.9 Economic order quantity

Economic order quantity is the level of inventory that minimizes the total inventory

holding costs and ordering costs. It is one of the oldest classical production scheduling

models. The framework used to determine this order quantity is also known as Wilson

EOQ Model or Wilson Formula. The model was developed by F. W. Harris in 1913,

but R. H. Wilson, a consultant who applied it extensively, is given credit for his early in-

depth analysis it.

2.9.1 Overview

Assume that the demand for a product is constant over the year and that each new order is

delivered in full when the inventory reaches zero. There is a fixed cost charged for each

order placed, regardless of the number of units ordered. There is also a holding or storage

cost for each unit held in storage (sometimes expressed as a percentage of the purchase

cost of the item) we want to determine the optimal number of units of the product to

order so that we minimize the total cost associated with the purchase, delivery and

storage of the product

The required parameters to the solution are the total demand for the year, the purchase

cost for each item, the fixed cost to place the order and the storage cost for each item per

year. Note that the number of times an order is placed will also affect the total cost;

however, this number can be determined from the other parameters

2.9.2 Underlying assumptions

1. The ordering cost is constant.

2. The rate of demand is constant

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3. The lead time is fixed

4. The purchase price of the item is constant i.e no discount is available

5. The replenishment is made instantaneously, the whole batch is delivered at once.

EOQ is the quantity to order, so that ordering cost + carrying cost finds its minimum. (A

common misunderstanding is that the formula tries to find when these are equal.)

2.9.3 Variables

Q = order quantity

Q * = optimal order quantity

D = annual demand quantity of the product

P = purchase cost per unit

S = fixed cost per order (not per unit, in addition to unit cost)

H = annual holding cost per unit (also known as carrying cost or storage cost)

(warehouse space, refrigeration, insurance, etc. usually not related to the unit cost)

2.9.4 The Total Cost function

The single-item EOQ formula finds the minimum point of the following cost function:

Total Cost = purchase cost + ordering cost + holding cost

- Purchase cost: This is the variable cost of goods: purchase unit price × annual demand

quantity. This is P×D

- Ordering cost: This is the cost of placing orders: each order has a fixed cost S, and we

need to order D/Q times per year. This is S × D/Q

- Holding cost: the average quantity in stock (between fully replenished and empty) is

Q/2, so this cost is H × Q/2

.

To determine the minimum point of the total cost curve, set its derivative equal to zero:

.

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The result of this derivation is:

.

Solving for Q gives Q* (the optimal order quantity):

Therefore:

.

Note that interestingly, Q* is independent of P; it is a function of only S, D, H.

2.9.5 Extensions

Several extensions can be made to the EOQ model, including backordering costs and

multiple items. Additionally, the economic order interval can be determined from the

EOQ and the economic production quantity model (which determines the optimal

production quantity) can be determined in a similar fashion.

A version of the model, the Baumol-Tobin model, has also been used to determine the

money demand function, where a person's holdings of money balances can be seen in a

way parallel to a firm's holdings of inventory.

2.9.6 Example

Suppose annual requirement (AR) = 10000 units

Cost per order (CO) = 2

Cost per unit (CU)= 8

Carrying cost %age (%age of CU) = 0.02

Carrying cost Per unit = 0.16

Economic order quantity =

Economic order quantity = 500 units

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Number of order per year (based on EOQ)

Number of order per year (based on EOQ) = 20

TC = CU * AR + CO (AR / EOQ) + CC (EOQ / 2)

TC = 8 * 10000 + 2(10000 / 500) + 0.16(500 / 2)

TC = 80080

If we check the total cost for any order quantity other than 500(=EOQ), we will see that

the cost is higher. For instance, supposing 600 units per order, then

Total cost = 8 * 10000 + 2(10000 / 600) + 0.16(600 / 2)

Total cost = 80081

Similarly, if we choose 300 for the order quantity then

TC = 8 * 10000 + 2(10000 / 300) + 0.16(300 / 2)

TC = 80091

This illustrates that the Economic Order Quantity is always in the best interests of the

entity, that the number of times an order is placed will also affect the total cost; however,

this number can be determined from the other parameters

.

2.7 Major Finding

Inventory Management Process flow inside the system area changes to the physical

environment is methodically reported through the integrated change process. This

discipline incorporates all hardware and software reconfigurations or updates. All

inputs to the centralized data base will be subject to the change process.

Inventory Management Data Model help evaluated Data Center Record,

System Record, Service Record, Financial Record, Hardware Component, Software

Components, Model Component Record, Feature Components Record, which help to

flow systematic Helpful information in this record assists in warranty and service

incidents. A hardware model record for each hardware type will be created and all

common hardware components will be entered using this template. Serial Number,

Generic device type, Model, Manufacturer, Owner, Location, Contract, type,

Component description, Component status, Product Number

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Collecting Data hierarchy which indicates that component records refer to data

center, system, service, and financial records. These four records are informational

components. This means they must be created prior to creating the component

records (hardware, software). It saves time because these records must be defined

before they can be referenced in component records. This allows you to establish

connections as you create the records.

Monitoring and Reporting Data determine by pass and recovery procedures

when a failing component has been identified. determine the level of a component,

and also other components that are affected when a problem occurs. Establish

relationships between a component and any problem or change record in the data

base.

Business Function Interfaces have the more common business functions that

interface with Inventory Management include:Purchasing,Accounts,

Receivable/Payable,Department,,Committees,Strategic,Planning,Committees,

Security department

Out of toal sales, most of the sales ( 78%) sell is on full price, at off-season , out

of fashion, damage out and off date .This shows that BBSM is more active

controlling product than could not on loss .

SWOT analysis help to determine strength, weakness, opportunities, threats of

organization Professional attitude among the employees, , Competitive interest

structure .Effective credit appraisal system, Continuous innovative approach. Good

brand image and strong brand loyalty among its customers. Technologically driven

facilities to its customers. Lack of market coverage in rural areas, lack of good

advertisement strategies. Lack of diversified product, Lack of proper research and

development. High market coverage with in Kathmandu. Increasing trend of

Nepalese people moving in taking credit for individual purpose Best way to gain

customer satisfaction by fulfilling the dream of their customer, Low level income of

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the people Frequent change in BBSM directives and regulatory policies other small

super market coming up with similar services

Economic order quantity is the level of inventory that minimizes the total

inventory holding costs and ordering costs. It is one of the oldest classical

production scheduling models. EOQ is the quantity to order, so that ordering cost +

carrying cost finds its minimum. (A common misunderstanding is that the formula

tries to find when these are equal.)

Assume that the demand for a product is constant over the year and that each new

order is delivered in full when the inventory reaches zero. There is a fixed cost

charged for each order placed, regardless of the number of units ordered. There is also

a holding or storage cost for each unit held in storage (sometimes expressed as a

percentage of the purchase cost of the item) we want to determine the optimal number

of units of the product to order so that we minimize the total cost associated with the

purchase, delivery and storage of the product

The required parameters to the solution are the total demand for the year, the

purchase cost for each item, the fixed cost to place the order and the storage cost for

each item per year. Note that the number of times an order is placed will also affect

the total cost, however, this number can be determined from the other parameters

Theoretical knowledge in practice

Analyzing the information under study it has been cleared that there is difficult in

implementation theoretical knowledge in practice.

The study raveled the responsiveness for maintaining the Inventory in a current and

accurate state. Role is responsible for both mainframe and network resident devices and

software components linking with the Interfaces Systems Management disciplines and

financial department. BSM responsible for maintaining the Inventory Data Base

Repository and for guarantying the information contained within the Repository is

accurate and in a current state. Information is data entered, or entered via automated

tools.

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BBSM provides sell that product which is out of fashion, out of date, damage, off-season

product, festival scheme. Some product are return which is possible .and some product

which is sold to small store.

What surveyor feels during field visit

Mr. Min B. Gurung has truly visionary long-term goals and aim to establish farmer co-

operatives in Nepal which is estimated to give employment to 50,000 people in total once

the store expansion programme is complete, and is likely to position Bhat-Bhateni as the

largest corporate tax payer in the country

Bhat-Bhateni offers a convenient shopping experience where customers can save time,

save money.Bhat-Bhateni stores offer a unique shopping experience for customers in

Nepal following the international ‘hypermarket’ format. The ground floor offers a wide

range of fresh food and vegetables and a broad range of leading international Liquor,

Toiletries and Cosmetics brands. The remaining floors offer a wealth of choice including

Kitchenware, Clothing, Sports & Toys and Electricals, with convenient escalators and

air-conditioning on all floors. The Maharajgunj superstore includes a shirting & suiting

service and a promotional area to display carefully selected promotions. In addition,

furniture & fixtures is a new exciting offering being introduced in 2009 in both stores.

Both premises benefit from the co-location of an excellent value jewellery stores that

offer a wide range of gold and silver items in both traditional and modern ornaments.

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CHAPTER III: SUMMARY, CONCLUSION AND

RECOMMENDATION

3.1 Summary

Bhat-Bhateni offers a convenient shopping experience where customers can save time,

save money. BBSM stores offer a unique shopping experience for customers in Nepal

following the international ‘hypermarket’ format. The ground floor offers a wide range of

fresh food and vegetables and a broad range of leading international Liquor, Toiletries

and Cosmetics brands. The remaining floors offer a wealth of choice including

Kitchenware, Clothing, Sports & Toys and Electrical, with convenient escalators and air-

conditioning on all floors. The Maharajgunj superstore includes a shirting & suiting

service and a promotional area to display carefully selected promotions. In addition,

furniture & fixtures is a new exciting offering being introduced in 2009 in both stores.

Both premises benefit from the co-location of an excellent value jewellery stores that

offer a wide range of gold and silver items in both traditional and modern ornaments.

Parking arrangements are available free on the premises and a secure locker system

available to keep personal belongings. Restaurants, bank & cash machine and dry

cleaning services in the vicinity makes Bhat-Bhateni a one-stop shopping destination. If

you end up buying more than you can carry, Bhat-Bhateni offers a free home delivery

service. The 7-day return policy ensures a convenient shopping experience.

Bhat-Bhateni is a leading supermarket and departmental store chain in Nepal. With an

impressive growth history over 25 years Bhat-Bhateni has developed a reputation for

continuous improvements, every day low price and a product offer second to none.

There are currently two stores in Kathmandu, located in Bhat-Bhateni (head office store)

and a new superstore was opened in September 2008 in Maharajgunj. The stores are open

from 7:30am to 8:30pm, 7 days per week and offer a full range of 90,000 products from

500 local and international suppliers. More than 10,000 people visit the stores daily and

34

benefit from a 7-day return policy. With over 800 combined store staff, consistent

merchandising and assured customer service is guaranteed.

Bhat-Bhateni Group operates as a private limited company. It has been a successful

family business since the establishment in 1984 and has been the largest tax payer in the

retail sector for the last five years in Nepal.

3.2 Conclusion

Despite major economic and political turmoil in the country during the past few years,

the Nepalese market sector has been able to perform exceptionally well. This has been

well justified by the fact that most of the private, supermarket in Nepal have been able to

earn good amount of profit every year while other major sector of the economy have been

suffering. With the advancement in technology and rapid change in the need and

preference of the people, Bhat-Bhateni supermarket in Nepal have been coming out with

continuous innovative products, schemes and facilities. However, such initiations are

mainly concentrated towards the household sector. Other major sectors of the nation like

manufacturing, agriculture, and tourism and hotel industry are still under serious crisis.

These sectors are the major demanders of funds in case of any healthy economy. But in

the contemporary economic scenario of Nepal it is not the case. Due to serious slack

down of other major sectors, the demand for product has not been growing as it should

have, which in turn has led to the subsequent fall in market interest rate during the last

decade. Another important fact that should be taken into consideration is that since the

economic condition is not very conducive it magnifies the probability of BSM. The

Nepalese politics and economy is filled with so much uncertainty and insecurity that it

puts a big question mark on the profitability of any business and non-business

organization. And if the suparmarket has provided credit facility to many organizations

and small store there is high risk of such credit turning into non-performing assets. This

has led most of the store to focus on retail sector where there is less chance of default

than in corporate sector.

35

From the above analysis it is seemed that bhatbhateni supermarket is one of those

supermarkets that dedicated in serving their valued customers with excellence.

The trend analysis of operate provide and gross credit suggests that their values are better

than the estimation. The Housing item , clothing item, food item and entertainment item

are the most successful item. However the overall design of the supermarket is as per the

customer needs important it toward the success. The success of these wholesale items is

also the results of its sound and systematic lending procedure.

Thus this supermarket, pioneer in trade let somebody borrow have to give substantial

attention in its retail lending and credit growth in order to sustain them.

 

3.3 Recommendations

BBSM have its own strategy for Create Centralized Repository of Inventory information.

Utilize Automated Tools and Front-end to the Inventory Repository.

 Integrate the Inventory Repository with the everyday asset functions performed by

personnel, such as:

Asset Acquisition,

Asset Redeployment,

Asset Termination,

Lease and Contract Maintenance,

Volume Purchase Agreements, etc.

 

Utilize a “Criticality” indicator to relate assets and their criticality for disaster recovery

purposes. This will allow for reports that list all most critical resources for a specific

location, by type and costs.

 

Formulate a committee to investigate methods for improving Inventory Management and

implement the most rewarding suggestions from the committee.

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REFERENCE/ BIBLIOGRAPHY

: Sthapit Azaya Bikran (2007) Production and operations management, Kathmandu

Asmita book publication and distributions

: Panta, Prem Raj (2004). Research and report writing, Kathamndu, Buddha Academic

Enterprises.

: Van Horne and wachowicz, fundamenral of financial Management

: Coperland & Weston, financial theory & corporate policy, Addison Wesley

: www .smartqms_com-images-inventory-management-system

: Microsoft ® Encarta ® 2009. Inventory-management-system

: Wikipedia, the free encyclopedia.htm

: www. Google .com inventory-management-system

: www.dcag.com

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