Management of Inventories

7/25/2019 Management of Inventories

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Name: -Konar Esakikumar Class:- Mcom Part 2(ROLL NO. 25) Mobile:98193028

CHAPTER-1

INTRODUCTION

!n"#ntor$ in %ir s#ns# is 'in#& as an i sourc# o' a #nt#rris#s. *o%#"#r+ it is

common$ us#& to in&icat# ra% mat#ria in roc#ss+ 'inis,#&+ ackain sar#s an& ot,#r+

stock#& in orr to m##t an ##ct#& man& an& &istri/ution in 'utur#. E"#n t,ou,t

in"#ntor$ o' mat#ria is an i r#sourc# in t,# s#ns# it is not m#ant 'or t,# most imm#&iat#

us#+ it is amost a n#c#ssar$ to maintain som# in"#ntori#s 'or t,# smoot, 'unctionin o' t,#

oraniation.

,# /#n#'it o' in"#ntor$ can /# /#st unrstan& on# imain#s o' an oranisation is

%orkin on in"#ntori#s at a oranisation on r#c#i"in a sa#s orr %ou& ,a"# to orr

out t,# uait$ o' mat#rias r#uir#& 'or comut#r t,is orr %ait 'i t,# arri"#r an& start

ro&uction.

On# %i t,ink o' "arious &is-a&"anta# o' t,is %a$ o' 'uctuatin custom#rs %ou&

in"aria/# ,a"# to art #"#r$ ,i, ric# /#caus# o' t,# ric# m#a /u$ inc,. ,# ro&uction

cost aso /# ,i, /#caus# o' 'aciiti#s to tak# a&"anta# o' arc,in incas# t,#s# is

#c#ssi"# r#c#i"in at #it,#r r#c#its or at an$ o' t,# manu'acturin sta#&+ on %aitin

/# in#"ita/# to #t r#nc, sui#rs. ,# /a& on t,# manu'acturin s,o "ar$ 'rom #rio&

#n&in uon t,# orr on ,an& in s,o% a com# unt %ou& not /# a/# to ro"i

satis'actor$ custom#rs s#r"ic# an& %ou& 'ai to tak# a&"anta# o' #conomics in /uk

rocur#m#nt an& /atc, manu'acturin an& t,#ir %ou& not /# a/# to ro"i satis'actor$

custom#rs s#r"ic# an& %ou& 'ai to tak# a&"anta# o' #conomics in /uk rocur#m#nt an&

/atc, manu'acturin an& t,#ir %ou& n#t stan& on in com#tion /ot, in t,# mat#r o'

ric# an& custom#rs.

!n man$ oraniations mat#rias 'rom t,# ar#st us#& ##n&itur# it#ms ana$# o' t,#

'inancia start o' ar# no o' ri"at# an& u/ic s#ctor oranisation in&icat#s t,at mat#rias

accounts o' n#ar$ 04 o' tota ##n&itur# #ist in manu'acturin comani#s ar# ra%

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mat#rias+ %ork in ror#ss ( s#mi 'inis,#& oo&s)+ an& 'inis,#& oo&s. Ra% mat#rias ar#

t,os# /asic inut mat#rias t,at ar# con"#rt#& into 'inis,#& ro&ucts.

orkin roc#ss in"#ntori#s ar# s#mi- manu'actur#& ro&ucts t,at n##& mor# %ork /#'or#

t,#$ /#com# 'inis,#& %ork /#'or# t,#$ /#com# 'inis,#& ro&ucts 'or sa# 'inis,#& oo&s

in"#ntori#s ar# t,os# com#t#& manu'actur#& ro&ucts 'or sa#+ stock o' ra% mat#rias an&

%ork in roc#ss#s 'aciiti#s ro&uctions. ,is in"#ntor$ s#r"#s as ink /#t%##n t,#

ro&uction an& consumtion o' oo&s. 6 manu'acturin 'irm %i ,a"# su/s#u#nt$ ,i,

#"# o' a 3 kin&s o' in"#ntori#s r#tai o' %,o# sa#s+ 'irms %i ,a"# a "#r$ ,i, #"# o'

'inis,#& oo&s in"#ntori#s an& no ra% mat#rias an& %ork in roc#ss in"#ntori#s+

in"#ntori#s constitut# t,at most sini'icant art o' curr#nt ass#ts o' a ar# ma7orit$ o'

countri#s in !n&ia. or #am# an oraniation in"#ntori#s ar# aroimat#$ 04 o'curr#nt ass#ts in u/ic imit#& comani#s in !n&ia.

,#r# ar# &i''#r#nt t$#s o' in"#ntori#s

a) Ra% mat#ria

/) ork in ror#ss

c) inis,#& oo&s

&) tor#s : ui#s

Ra% mat#ria in"#ntor$ ar# t,# mat#rias an& comon#nts us#& to manu'acturin t,#

ro&uct /$ t,# coman$. ,#s# ar# us# as inuts in makin t,# 'inis,#& oo&s.

ork in ror#ss is t,# mat#rias us#& in &i''#r#nt sta#s o' ro&uction. ,#s# ar# aso

ca#& as stock in ror#ss. ,#s# ar# norma s#mi-'inis,#& oo&s t,at ar# at &i''#r#nt

sta#s o' ro&uction.inis,#& oo&s in"#ntor$ consist o' 'ina ro&uct manu'actur#&+ %,ic, ar# r#a&$ to sa#

/ut not $#t so&. ;#n#ra$+ manu'acturin 'irms ,o& a t,#s# t$#s o' in"#ntor$ an&

&istri/ution 'irms ,o& 'inis,#& ro&ucts.

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tor#s an& ui#rs ar# t,at art o' in"#ntor$ %,ic, &o#s not /#com# 'art o' 'ina ro&uct

/ut ar# r#uir#& 'or ro&uction roc#ss. ,#s# in"o"# t,# cotton %ast#+ oi an& u/ricants+

soas+ /rooms i,t /u/s #tc. ,#$ 'orm a "#r$ minor art o' tota in"#ntor$+ %,ic, &o#s

not in"o"# sini'icant in"#stm#nt.

1. CASH AND MARKETABLE INVESTMEN:


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!n"#ntor$ mana#m#nt is a sci#nc# rimari$ a/out s#ci'$in t,# s,a# an& #rc#nta#

o' stock#& oo&s. !t is r#uir#& at &i''#r#nt ocations %it,in a 'aciit$ or %it,in man$

ocations o' a su$ n#t%ork to r#c# t,# r#uar an& ann#& cours# o' ro&uction an&

stock o' mat#rias.

,# sco# o' in"#ntor$ mana#m#nt conc#rns t,# 'in# in#s /#t%##n r##nis,m#nt

#a& tim#+ carr$in costs o' in"#ntor$+ ass#t mana#m#nt+ in"#ntor$ 'or#castin+ in"#ntor$

"auation+ in"#ntor$ "isi/iit$+ 'utur# in"#ntor$ ric# 'or#castin+ ,$sica in"#ntor$+

a"aia/# ,$sica sac# 'or in"#ntor$+ uait$ mana#m#nt+ r##nis,m#nt+ r#turns an&

'#cti"# oo&s+ an& man& 'or#castin. =aancin t,#s# com#tin r#uir#m#nts #a&s to

otima in"#ntor$ #"#s+ %,ic, is an on-oin roc#ss as t,# /usin#ss n##&s s,i't an&

r#act to t,# %ir #n"ironm#nt.

!n"#ntor$ mana#m#nt in"o"#s a r#tai#r s##kin to acuir# an& maintain a ro#r

m#rc,an&is# assortm#nt %,i# orrin+ s,iin+ ,an&in+ an& r#at#& costs ar# k#t in

c,#ck. !t aso in"o"#s s$st#ms an& roc#ss#s t,at inti'$ in"#ntor$ r#uir#m#nts+ s#t

tar#ts+ ro"i r##nis,m#nt t#c,niu#s+ r#ort actua an& ro7#ct#& in"#ntor$ status an&

,an a 'unctions r#at#& to t,# trackin an& mana#m#nt o' mat#ria. ,is %ou&

incu t,# monitorin o' mat#ria mo"#& into an& out o' stockroom ocations an& t,#

r#conciin o' t,# in"#ntor$ /aanc#s. !t aso ma$ incu 6=< ana$sis+ ot trackin+ c$c#

countin suort+ #tc. Mana#m#nt o' t,# in"#ntori#s+ %it, t,# rimar$ o/7#cti"# o'

t#rminin>controin stock #"#s %it,in t,# ,$sica &istri/ution s$st#m+ 'unctions to

/aanc#t,# n##& 'or ro&uct a"aia/iit$ aainst t,# n##& 'or minimiin stock ,o&in an&

,an&in costs.

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CHAPTER #

Ob$e%"i&es o I!&e!"o'( Ma!a)eme!"

6 'un&am#nta o/7#cti"# o' a oo& in"#ntor$ mana#m#nt is to ac# an orr at t,# ri,t

tim# 'rom t,# ri,t sourc# to acuir# t,# ri,t uantit$ at t,# ri,t ac# an& uait$. ,i#

"#oin an aroriat# #"# o' in"#ntor$ t,# 'oo%in o/7#cti"#s s,ou&

/# k#t in min&@

1.P'o"e%" (o*' %om+a!( a)ai!s" ",e"

Mak# sur# t,at t,# on$ #o# in $our %ar#,ous# /#on in $our %ar#,ous#.

Pi'#ra# is a ar#r ro/#m t,an most &istri/utors r#ai#.

#.Es"ablis, a! a++'o&e s"o% lis" o' ea%, /a'e,o*se

Most a& in"#ntor$ is AB.O.6A (a& on arri"a). Orr on$ t,# amount o' non-stock or s#cia orr it#ms t,at $our custom#r ,as committ#& to /u$. =#'or# a&&in an

it#m to in"#ntor$+ tr$ to #t a urc,as# commitm#nt 'rom $our custom#r. !' t,is is not

ossi/#+ in'orm t,# sa#s#rson %,o r#u#sts t,# it#m t,at ,# or s,# is #rsona$

r#sonsi/# 'or ,a' t,# carr$in cost o' an$ art o' t,# initia s,im#nt t,at isnCt so&

%it,in nin# mont,s.

0.Assi)! a! *se bi! lo%a"io!s

6ssin rimar$ an& surus /in ocations 'or #"#r$ stock#& it#m. 6 ickin an&

r#c#i"in &ocum#nts s,ou& ist t,# rimar$ /in ocation (in #it,#r c,aract#rs or a /ar

co). it, corr#ct /in ocations on &ocum#nts+ orr ickin is ro/a/$ t,# #ast

comicat#& 7o/ in $our %ar#,ous#. 6ssin in##ri#nc#& #o# to t,is task an& $our

most ##ri#nc#& %ar#,ous# %ork#rs to r#c#i"in in"#ntor$ an& stock mana#m#nt.

.Re%o' all ma"e'ial lea&i!) (o*' /a'e,o*se

,#r# s,ou& /# aroriat# a#r%ork 'or #"#r$ t$# o' stock %it,&ra%a. Dnr

no circumstanc#s s,ou& mat#ria #a"# t,# %ar#,ous# %it,out /#in #nt#r#& in t,#

comut#r. Eiminat# Ano c,ar#>no a#r%orkA mat#ria s%as. Pro&uct sam#s s,ou& /#

c,ar#& to a sa#s#rsonCs account unti t,#$ ar# #it,#r r#turn#& to stock or c,ar#& to t,#

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custom#r.

2.P'o%ess +a+e'/o' i! a "imel( ma!!e'

6 rint#& ickin &ocum#nts s,ou& /# 'i#& /$ t,# #n& o' t,# &a$. tock r#c#its

s,ou& /# ut a%a$ an& #nt#r#& in t,# comut#r s$st#m %it,in 2? ,ours o' arri"a.

3.Se" a++'o+'ia"e ob$e%"i&es o' (o*' b*(e's

=u$#rs s,ou& /# 7u& an& r#%ar& /as#& on t,# custom#r s#r"ic# #"#+

in"#ntor$ turns+ an& r#turn on in"#stm#nt 'or t,# ro&uct in#s 'or %,ic, t,#$ ar#

r#sonsi/#.

4.E!s*'e ",a" s"o% bala!%es a'e a%%*'a"e a! /ill 'emai! a%%*'a"e

!m#m#nt a comr#,#nsi"# c$c# countin roram. 6 oo& c$c# countin

roram can r#ac# $our tra&itiona $#ar-#n& ,$sica in"#ntor$.


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CHAPTER 0

Mo"i&es o' ,oli!) i!&e!"o'ies

6 coman$ ,as "arious moti"#s 'or ,o&in t,# in"#ntor$ as stat#& /#o%@

1) T'a!sa%"io! Mo"i&e@

,#


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a&"anta# in t#rm o' uantit$ &iscounts conn#ct#& %it, /uk urc,asin or anticiatin

ric# ris#.

Reaso!s o' ee+i!) s"o%

,#r# ar# som# /asic r#asons 'or k##in an in"#ntor$

1. im# - ,# tim# as r#s#nt in t,# su$ c,ain+ 'rom sui#r to us#r at #"#r$

sta#+ r#uir#s t,at $ou maintain c#rtain amounts o' in"#ntor$ to us# in t,is #a&

tim#. *o%#"#r+ in ractic#+ in"#ntor$ is to /# maintain#& 'or consumtion &urin

C"ariations in #a& tim#C. L#a& tim# its#' can /# a&&r#ss#& /$ orrin t,at man$

&a$s in a&"anc#.

2. Dnc#rtaint$ - !n"#ntori#s ar# maintain#& as /u''#rs to m##t unc#rtainti#s in man&+

su$ an& mo"#m#nts o' oo&s.

3. Economi#s o' sca# - !a con&ition o' Aon# unit at a tim# at a ac# %,#r# a us#r

n##&s it+ %,#n ,# n##&s itA rinci# t#n&s to incur ots o' costs in t#rms o' oistics.

o /uk /u$in+ mo"#m#nt an& storin /rins in #conomi#s o' sca#+ t,us in"#ntor$.

?. 6r#ciation in Fau# - !n som# situations+ som# stock ains t,# r#uir#& "au#

%,#n it is k#t 'or som# tim# to ao% it r#ac, t,# sir#& stan&ar& 'or consumtion+

or 'or ro&uction. or #am# /##r in t,# /r#%in in&ustr$.

P*'+ose

!n"#ntor$ roortionait$ is t,# oa o' man&-&ri"#n in"#ntor$ mana#m#nt. ,#

rimar$ otima outcom# is to ,a"# t,# sam# num/#r o' &a$sC (or ,oursC+ #tc.) %ort, o'

in"#ntor$ on ,an& across a ro&ucts so t,at t,# tim# o' run out o' a ro&ucts %ou& /#

simutan#ous. !n suc, a cas#+ t,#r# is no A#c#ss in"#ntor$+A t,at is+ in"#ntor$ t,at %ou&

/# #'t o"#r o' anot,#r ro&uct %,#n t,# 'irst ro&uct runs out. Ec#ss in"#ntor$ is su/-

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otima /#caus# t,# mon#$ s#nt to o/tain it cou& ,a"# /##n utii#& /#tt#r #s#%,#r#+ i.#.

to t,# ro&uct t,at 7ust ran out.

,# s#con&ar$ oa o' in"#ntor$ roortionait$ is in"#ntor$ minimiation. =$ int#ratin

accurat# man& 'or#castin %it, in"#ntor$ mana#m#nt+ rat,#r t,an on$ ookin at asta"#ra#s+ a muc, mor# accurat# an& otima outcom# is ##ct#&.

!nt#ratin man& 'or#castin into in"#ntor$ mana#m#nt in t,is %a$ aso ao%s 'or t,#

r#&iction o' t,# Acan 'itA oint %,#n in"#ntor$ stora# is imit#& on a #r-ro&uct /asis.

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. COST O5 HOLDIN6 INVENTOR7

,# cost associat#& %it, in"#ntor$ is o' t%o t$#s@

a) Or&inar$ or 6cuisition or #t-u costs.

/)


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1. Orrin cost "ari#s in"#rs#$ %it, t,# orr si#. ;r#at#r t,# si# #ss t,# cost an& "ic#

"#rsa.

2.


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tock out in ra% mat#rias %i incu cost o' acin orrs an& cost o' a$ in

ro&uction.

tock out in %ork in ror#ss in"#ntor$ r#sut in a&&itiona cost o' r#-sc,#&uin an&

s##&in ro&uction %it,in t,# ant. !t ma$ r#sut on ost ro&uction cost.

,# '#%#r t,# orr or ar#r t,# in"#ntori#s t,# o%#r %i /# t,# orrin cost o' t,# 'irm

an& t,# ar#r t,# ac#&+ or mor# 'r#u#nt t,# acuisition o' t,# 'irm in"#ntor$ ma+ t,#

,i,#r ar# suc, costs.

*#nc# t,#s# costs ar# in"#rs#$ r#at#& to t,# si# o' in"#ntor$. ,is cost can /# r#&uc#& /$

acin #ss orr 'or ar# amount.

#. Ca''(i!) Cos":

,#s# cost incu ##ns#s in"o"# in storin t,# oo&s 'or a #rio& to tim#.

,#s# ar# o' t%o t$#s@

a)


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CHAPTER 2

BENE5ITS O5 INVENTOR7 MANA6EMENT:

!n"#ntor$ ao%s custom#rs to /# s#r"#& uick$ an& con"#ni#nt$

!n"#ntor$ can /# us#& so t,at a coman$ can /$ in /uk %,ic, is usua$ c,#a#r.

!n"#ntor$ ao%s o#rations to m##t un##ct#& sur#s in man&.

!n"#ntor$ is insuranc#+ i' t,#r# is an ##ct#& int#rrutions in su$ 'rom outsi t,#

o#rations ar# %it, in t,# o#ration.

!n"#ntor$ is insuranc#+ i' t,#r# is an un##ct#& int#rrution in su$ 'rom outsi

t,# o#rations ar# %it, in t,# o#ration.

!n"#ntor$ ao%s &i''#r#nt arts o' t,# o#rations to cou#&+ t,is m#ans t,at t,#$

can o#rat# in#nnt$ to suit t,#r# o%n constraints an& con"#ni#nc# %,i# t,#

stock o' it#ms /#t%##n t,#s# a/sor/s s,ort t#rm &i''#r#nc# /#t%##n su$ an&

man&.

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CHAPTER 3.

TECHNI9UES O5 INVENTOR7 MANA6EMENT

!n"#ntor$ mana#m#nt r#uir# an #''#cti"# contro o"#r in"#ntori#s. !n"#ntor$ contror#'#rs to a s$st#m %,ic, #nsur# su$ o' r#uir# uantit$ an& uait$ o' in"#ntor$ at

r#uir#& tim#+ takin into consiration t,at is no unn#c#ssar$ in"#stm#nt in in"#ntori#s.

*#nc# t,# aim o' 'inancia mana#r is to o/tain an otimum #"# o' in"#ntor$ on

t,# /asis o' tra-o'' /#t%##n cost an& /#n#'it to maimi# t,# o%n#r %#at,.

ABC ANAL7SIS:-

6=< 6na$sis is on# o' %i$ us#& in"#ntor$ contro too. Dnr t,is %#

,a"# to cassi'$ mat#rias accor&in to t,#ir imortanc# an& conc#ntrat# mor# on critica

it#ms. !mortanc# o' an$ it#m aris#s &u# to t,# t%o 'actors nam#$+ consumtion "au#s

an& critica$ in -us#.


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t,# num/#r o' it#ms contri/ut#s a/out 204 o' t,# annua consumtion "au# an& t,#

r#mainin 04 o' t,# it#ms contri/ut# 104 o' t,# annua consumtion "au#. *#nc#

consumtion "au# n##& to /# contro#& at t,# ,i,#st #"# an& t,#s# ar# t,# 6 it#ms. ,#

contro o' /ottom 04 o' t,# it#ms t,at contri/ut# on$ 104 o' t,# annua consumtion

"au#+ t,at ar# not#& as < it#ms can /# #at#& to t,# o%#st cision makin #"#s

%,i#+ t,# mi& = it#ms can /# contro#& /$ t,# mi& #"#s o' #rsonn#.

A,# 'oo%in 'iur#s /rin out c#ar$ t,# conc#t o' 6=< 6na$sisA.

Ca"e)o'( Val*e I"em 1; ; o A!!*al

T,e A&a!"a)e o ABC me",o o I!&e!"o'( %o!"'ol is as olio /s:-

!t /#com#s ossi/# to conc#ntrat# a #''orts in ar#as %,ic, n##& #nuin#

#''orts. ,is m#t,o& ro&uc#s /#tt#r r#suts an& in"o"#s minimum contro. !n

t,# cas# o' 6 it#ms car#'u att#ntion is ai& at #"#r$ sta# i.#.+ #stimat#s o'

r#uir#m#nts+ urc,asin sa'#t$ stocks+ + r#c#its+ ins#ction an& issu#s. 6

cos# %atc, on ,i, consumtion it#ms an& t,#ir ror#ss o' r##nis,m#nt

#tc+ maintain#&. !n t,# cas# o' < it#ms %,ic, ar# num/#rs an& at t,# sam#

tim# in ##nsi"# ar# oos#$ contro#&.

,# it#ms 'a unr = cat#or$ ma$ /# &is#ns#& %it,in t,# r#cor& k##in

s$st#m. ,is %i ,# in sa"in tim#+ mon#$ an& a/or %it,out #n&an#rin

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ro&uction sc,#&u#+ it is most #''#cti"# an& #conomica m#t,o& as it is /as#&

on t,# s##cti"# m#t,o&. !t ,#s in acin t,# orrs+ ci&in t,# uantit$

o'

Purc,asin sa'#t$ stocks #tc. ,us sa"in t,# oraniation 'rom t,#

unn#c#ssar$ stocks outs or surus#s.

ECONOMIC ORDER 9UANTIT7:-

On# o' t,# ma7or in"#ntor$ mana#m#nt ro/#ms to /# r#so"#& is ,o% muc, in"#ntor$

s,ou& /# a&& %,#n in"#ntor$ is r##nis,#&. !' t,# 'irm is /u$in ra% mat#rias+ it ,asto ci ots in %,ic, it ,as to /# urc,as#& on cas, r##nis,m#nt

!' t,# 'irm is annin ro&uction as #r sc,#&u#. ,#s# ro/#ms ar# ca#& orr

uantit$ ro/#m an& task o' t,# 'irm is to t#rmin# otimum in"#ntor$ #"# in"o"#s

t%o t$#s o' costs@

(1) Orrin cost

(2)


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"i#% is t,at so on as t,#$ ar# committ#& cost t,#$ n##& not to /# r#"ok#& in comutin

orrin cost.


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#"# %i /# su''ici#nt to m##t t,# r#uir#m#nts o' ro&uction u to t,# tim# 'r#s, su$

o' t,# mat#ria is r#c#i"#&.


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6mount to mor# %asta# /#caus# o' mor# ,an&in+ soia#+ o/so#sc#nc#

!n"o"#s mor# carr$in cost.

Ec#ss stock %i incr#as# t,# cost o' stora#+ t,#r#/$ incr#asin$ s#in cost. Ec#ss

stock %i in"o"# unn#c#ssar$ /ocka o' %orkin caita an& r#"#nt its a"aia/iit$ 'or

a mor# ro'ita/# us#.

tock in #c#ss %i r#"#nt t,# mana#m#nt 'rom takin a&"anta#s o' ric# 'uctuation

an& 'a"ora/# mark#t con&ition.

,# 'iation o' maimum #"# #n&s on t,# 'oo%in 'actors@-

Rat# o' consumtion o' t,# mat#ria

Mon#$ a"aia/#

im# r#uir#& to o/tain i"#ri#s

tora# sac# a"aia/#

Economic orr uantit$

Mark#t con&itions+ s#asonait$ an& ric# 'uctuation

Possi/iit$ o' oss &u# to t#rioration

,# 'ormua 'or t,# cacuation o' Maimum stock L#"# i"#n /$ ,#&on is as

'oo%s@-Maimum stock L#"#H R#- orrin I R#- orrin - uait$ (Minimum


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6"#ra# stock #"#HMinimum stock #"# I Fi o' r#corr uantit$ o' C>

(Minimum tock L#"#I Maimum tock L#"#) Ban#r L#"#@ -

,is m#ans #"#s at %,ic, norma issu#s ar# ma on$ unr s#ci'ic instructions. ,#

urc,as#s o''ic#r %i mak# s#cia arran#m#nts to #t t,# mat#rias %,ic, r#ac, at t,#ir

&an#r #"# so t,at t,# ro&uction ma$ not sto &u# to stora# o' mat#ria Ban#r L#"#

-6"#ra#


21/44

,# manu'acturin 'irmCs in"#ntor$ consists o' t%o mor# comon#nts@

Ra% Mat#ria

ork in roc#ss

6n ana$st aso is int#r#st#& in #aminin t,# #''ici#nc$ %it, %,ic, t,# 'irm

con"#rts ra% mat#ria into %ork in roc#ss an& t,# %ork in roc#ss into 'inis,#& oo&s.

,at is+ ,# %ou& ik# to kno% t,# #"#s o' ra% mat#rias in"#ntor$ an& %ork in roc#ss

in"#ntor$ ,#& /$ t,# 'irm on an a"#ra#. ,# ra% mat#ria in"#ntor$ s,ou& /# r#at#& to

mat#rias consum#&+ an& %ork in roc#ss to t,# cost o' ro&uction.

Ra% mat#ria in"#ntor$ turno"#r H mat#ria consum#&

6"#ra# ra% mat#ria in"#ntor$

ork in roc#ss in"#ntor$ turno"#r H cost o' ro&uction

6"#ra# %ork in roc#ss in"#ntor$

,# in"#ntor$ turno"#r s,o%s ,o% rai&$ t,# in"#ntor$ is turnin into r#c#i"a/# t,rou,

sa#s. ;#n#ra$+ a ,i, in"#ntor$ turno"#r is in&icati"# o' oo& in"#ntor$ mana#m#nt. 6

o% in"#ntor$ turno"#r imi#s #c#ssi"# in"#ntor$ #"#s t,an %arrant#& /$ ro&uction

an& sa#s acti"iti#s+ or a so% mo"in or o/so#t# in"#ntor$. 6 ,i, #"# o' suis,

in"#ntor$ amounts to unn#c#ssar$ ti#- u o' 'un&s+ imairm#nt o' ro'it an& incr#as#&

costs. !' t,# o/so#t# in"#ntori#s ,a"# to /# %ritt#n o''+ t,is %i a&"#rs#$ a''#ct t,#

%orkin caita an& iui&it$ osition o' t,# 'irm. 6ain+ a r#ati"#$ ,i, in"#ntor$

turno"#r s,ou& /# car#'u$ ana$#&. 6 ,i, in"#ntor$ turno"#r ma$ /# t,# r#sut o' a

"#r$ o% #"# o' in"#ntor$ %,ic, r#suts in 'r#u#nt stock outs. ,# turno"#r %i aso /#

,i, i' t,# 'irm r##nis,#s its in"#ntor$ in too man$ sma ot si#s. ,# situations o'

'r#u#nt tock outs an& too man$ sma in"#ntor$ r#ac#m#nts ar# cost$ 'or t,# 'irm.

21


22/44

,us+ too ,i, an& too o% in"#ntor$ turno"#r ratios s,ou& /# in"#stiat#& 'urt,#r. ,#

comon#nts o' in"#ntor$ ma$ ,# to t#ct t,# im/aanc#& in"#stm#nts in t,# "arious

in"#ntor$ comon#nts.

4. VED ANAL7SIS,is t$# o' ana$sis &i"is t,# in"#ntor$ into t,r## cat#ori#s in t,# sc#n&in orr o'

t,#ir critica$ as i"#n /#o%@

V: !t stan&s 'or "ita it#ms ana$sis o' stock r#uir#s mor# att#ntion. !n cas# o' out o'

stock t,#r# %i /# stoa# o' ro&uction. F. it#ms must /# stor#& in auat# uantit$ to

#nsur# smoot, o#ration o' t,# ant.

N: !t stan&s 'or #ss#ntia it#ms. uc, it#ms ar# #ss#ntia 'or #''ici#nt runnin. ,# s$st#m

%i not 'ai %it,out t,#s# it#ms. !t s,ou& /# s##n t,at t,#s# it#ms ar# a%a$s in stock.

S: !t stan&s 'or sira/# it#ms %,ic, &o not sto t,# ro&uction imm#&iat#$. 6"aia/iit$

o' suc, it#ms %i #nsur# mor# #''ici#nc$ an& #ss 'atiu#&.

FEB ana$sis is suita/# 'or caita int#nsi"# in&ustri#s. !t is us#'u 'or suc, mat#ria

%,ic, is &i''icut to rocur#.

=. 5NSD ANAL7SIS

5: ,is t$#s o' ana$sis s,o%s mo"in osition o' in"#ntor$ &urin a c#rtain #rio&. !'

t,# a# is minimum t,# in"#ntor$ osition is satis'actor$. !' t,# a# is maimum it

22


23/44

in&icat#s so% mo"in it#ms. !t a$ /# &u# to o%#r man& or in#''ici#nc$ in stockin

osition. Ec#ssi"# in"#stm#nt in in"#ntor$ m#ans ,u# amount is /ock#& in in"#ntor$.

!t amounts to o% ro'ita/iit$.

NB ana$sis s,o%s &i"ision o' t,# in"#ntor$ into 'our cat#ori#s in t,# sc#n&in

orr o' t,#ir usa#.5: !t stan&s 'or 'ast mo"in it#ms. uc, in"#ntor$ is consum#& in a s,ort #rio&. !t is a

stock o' 'ast mo"in it#ms. !n orr to a"oi& stock out osition t,# it#ms in t,is cat#or$

must /# o/s#r"#& constant$.

N: !t stan&s 'or norma it#ms suc, stock is #,aust#& o"#r a #rio& o' $#ar. !n orr to

a"oi& surus stock t,# in"#ntor$ #"#s s,ou& /# 'i#& on t,# /asis o' n#% #stimat#s.

S: !t stan&s 'or so% mo"in it#ms. uc, it#ms ast 'or t%o or mor# $#ars. uc, it#ms

s,ou& /# r#"i#%#& "#r$ car#'u$ /#'or# ac#m#nt o' an$ orr.

D:!t stan&s 'or a& stock. No 'urt,#r man& is s##n 'or t,# #istin stock. !t imi#s

mon#$ s#nt cannot /# r#ai#& /ut it r#uir#s som# us#'u sac#. uc, it#ms s,ou& /#

inti'i#& an& #''orts s,ou& /# ma to 'in& at#rnati"# us#s.

CHAPTER > ?

CASE STUD7 ON

INVENTOR7 MANA6EMENT O5 HINDUSTAN SHIP7ARD LIMITED

A! o&e'&ie/:

Eac, it#m ,as a /in car& ostin ar# &on# manua$ at r#s#nt mont,$ consumtion

stat#m#nt ar# r#ar#& an& circuat#& to a conc#rn#& r#ar#& #"#s /as#& on 3 $#ars

,istor$ ,as /##n 'i#& an ac#s ,is orr corr#son&in$ a min ma s$st#m is /#in

o#rat#& an& a min stock o' mont,s is aim#& 'or =:< cat#or$ it#m. Dsua$ ,i, "au#

it#ms ar# orr#& on t,# /asis o' EOG uantiti#s or as in t,# cas# o' r#uar orr ar#

23


24/44

ac#& an& i"#r$ sc,#&u# is i"#n to t,#s# sui#rs. ,# i"#r$ ma$ /# &ai$ or

%##k$ or mont,$ #n&in uon t,# uantit$ consum#&. or instanc# ,$&roc,oric aci&

is i"#r#& on &ai$ /asis. or =:< cass it#ms min-mi s$st#m is a&,#r#& to strict$

%,i# as stat#& /#'or# =:< it#ms ar# o#rat#& on ni stock /asis. Dsua$ < it#ms ar#

orr#& manua$ or caitaiin t,# sar# arts r#c#i"#& aon %it, t,# #uim#nt.

6 t,# innts t,at ar# rais#& /$ us#r artm#nt com# to t,# int#rrution simiar$

i' 'inis,#& oo&s in"#ntori#s ar# not su''ici#nt to m##t t,# man& o' com#tition %,ic,

%i amount to a #rman#nt oss to t,# mat#rias annin s#ction. ,# innts ar# c,#ck#&

'or s#ci'ications su/stitut# an& a"aia/iit$ an& t,#n c#ar#& 'or n#c#ssar$ urc,as# action

caita it#ms ar# not roc#ss t,rou, t,# mat#ria annin or maint#nanc# s#ctions /ut

&ir#ct$ /$ t,# roc#ss t,rou, o#ration ant ##cuti"# a't#r c#aranc# /$ t,# 'inanc# an&t,# mana#m#nt t,# c,airman r#"i#%s t,# aro"#s /uts 'r#u#nt$ an& t,# consum#&

artm#nts r#sonsi/# 'or a&"#rs# "arianc# an& u#stion#&.

,# 'oo% u action is r#uir#& to #t t,# mat#ria as #r t,# i"#r$ sc,#&u#&

ins#ctions artm#nt %i ins#ctions artm#nt %i ins#ct t,# mat#rias is t#c,nica

an& uait$ as#cts o' t,# mat#ria is t#c,nica an& uait$ as#cts o' t,# mat#rias r#c#i"#&

a't#r r#c#i"in t,# mat#ria r#c#its r#orts (MRR) aon %it, ins#ction r#ort t,#

urc,as# artm#nt %i a&"is# t,# 'inanc# artm#nt to arran# t,# a$m#nt 'or t,#

mat#rias r#c#i"#&. !' an$ irr#uariti#s in su$in o' mat#ria t,# action ar# sou,t

accor&in to t,# t#rms an& con&itions o' t,# urc,as#s orr 'or an& r#7#ct#& mat#rias t,#

urc,as# artm#nt %i ,a"# to corr#sonnc# %it, t,# sui#rs an& mak# n#c#ssar$

arran#m#nt aainst t,# &ama#& mat#rias.

5UNCTIONS O5 THE INSPECTION DEPARTMENT

,# *in&ustan s,i$ar& imit#& mat#rias ins#ction artm#nt is 'unctionin

unr t,# contro &i"ision+ %,ic, is &ir#ct$ r#ort#& to &ir#ct$ (t#c,nica). !ns#ction

t is #ui#& %it, t,# t#c,nica$ kno%n #& rou #rson to ins#ct t,# mat#rias

#r t,# r#uir#m#nt t,# incomin mat#rias is r#c#i"#& an& /rou,t t,# c#aranc#

2?


25/44

artm#nt an& ,an& o"#r t,# c#aranc# o%n#r. ,# stor# #rsona %i c,an# 'or t,#

ins#ction o' t,# mat#rias %it, co-or&ination o' t,# ins#ction artm#nt %i ins#ct t,#

mat#rias s#ci'ication as #r t,# urc,as#s orr t#c,nica s#ci'ications m#ntion#& /$

us#& artm#nt &ra%in an& sin o''ic# an& t,# cassi'ication c#rti'i#s i' an$

,# 'oo%in m#t,o&s %,i# ins#ctin

,# mat#rias ar# 'oo%#&@

=uk ik# /ots an& /u/s+ aint : consuma/# #tc ar# ins#ct#& at ran&om on$.

or st#a 1004 "#ri'ication is &on# 'or a/o"# ?.5 mm t,ickn#ss ins#ction is &on# at

ran&om on$.

or tim/r#s 1004 ins#ction is &on#.

or i#s 1004 ins#ction is &on#+ ins#ction is con&uct#& in t,# 'oo%in ar#as.

Guait$ as #r s#ci'ications.

Guait$ as #r urc,as# orr o' sui#rs ackin ist.


26/44

5UNCTIONS O5 STORE DEPARTMENT

!n *in&ustan s,i$ar& imit#&+ stor# artm#nt is su/-&i"i& on t,# /asis o'

mat#rias %is#. ,# oraniation c,art #ncos#s ,#r# %i i"# c#ar "i#% a/out t,# tota

stor#s oraniation in *in&ustan s,i$ar& imit#&. Norma$ t,# 'unctionin o' a stor#s is

simiar. ,# main 'unction is to maintain t,# ro#r stock #"#s o' "arious stor#s it#ms 'or

smoot, run o' t,# ro&uction sc,#&u# an& at t,# sam# ti# t,# stor# 'unction s,ou& s## t,#

,u# amount o' caita is not ock#& u in t,# 'orm o' in"#ntori#s. ,# ro#r &ocum#nts+

%,ic, ar# usin 'or t,# mat#rias in stor#s+ ar# as 'oo%s.

Ma"e'ials Re%ei+" Re+o'" MRR8 : -,is is norma$ r#ar#& /$ t,# conc#rn#&

stor#s on t,# /asis o' ins#ction r#ort MRR no+ &at#+ mat#rias co+ scrition co+unit o' m#asur#m#nt+ uantit$ r#c#i"#&+ uantit$ acc#t#& : P.O no sui#rs+ nam# o'

co+ 1R no : &at# #tc+ MRR %i /# r#ar#& in 5 coi#s 'or.


27/44

Ma"e'ial Re"*'! No"esMRN8: -

,is is simiar as mat#ria r#uisition %ritt#n /$ t,# us#r>ro&uction artm#nt t,# MRN

is 'or r#turnin t,# un-us#& mat#rias to t,# stor# t,# MRN is aso containin a t,# tais

as MR /ut it is norma$ rint#& in &i''#r#nt coors. !n *in&ustan s,i$ar& imit#& MR is

ink>r#& coor an& MRN is $#o% coor.

INVENTOR7 NORMS

Maintain t,# in"#ntor$ /aanc# an& intimatin to t,# ,i,#r #"#s 'or takin

n#c#ssar$ st#s %,#r#"#r r#uir#& intimatin to t,# ot,#r #"# o' mana#m#nt a/out t,#

non-mo"in insistin t,# non mo//in surus mat#rias %it, t,# #ntr$ a/out artm#nt

co-or&ination t,# in"#ntor$ contro mana#m#nt is oraniation o' *in&ustan s,i$ar&

imit#&. !n orr to su#r"is# t,# &u#s o' t,# 'un&s ar# r#uir#& to #t 'rom t,# /orro%in

uick$ mana#m#nt in'ormation r#ort #rtainin o#ratin s$st#m+ 'un&s 'o%

stat#m#nts+ #ak #"# /aanc# s,##ts 'or t,# #nsurin $#ar in as muc, as on$ 104

"arianc# /#t%##n actua an& ro7#ct#& 'iur#s ar# ao%#& t,# in'ormation s$st#m %i

#nsur# in &isciin#& an& ann#& aroac,#& to cr#&it annin 'or in"#ntor$ contro.

,# maimum #"# o' norms ,as /##n i"#n as ?-10m %##ks 'or ra% mat#rias no%

to 5 %##ks 'or s#mi 'inis,#& oo&s+ 3-8 %##ks 'or accounts r#c#i"a/#s+ #n&in uon

t,# natur# o' in&ustr$. !n a '#% cas#s t,# 'inis,#& oo&s ar# account r#c#i"a/#s ,as /##n

com/in#& an& "ariation ao%#& #n&in on ocation o' 'actori#s+ t$#s o' inut #tc+ t,#

norms ar# to a$ /$ t,# #n&in institutions %it, a '#i/# aroac,. *in&ustan s,i$ar&

imit#& is 'oo%in t,# in"#ntor$ norms o' =PE sinc# 1985 aro"#s tota in"#ntor$

norms is Rs. 1910 Lak,s. ,# 'oo%in ta/# is t,# /r#ak u to #ac, stor# %is#.

2

Mac,in#r$ Euim#nt 100

t## 550

;#n#ra tor#s 250

im/#r tor#s 20

Ot,#r tor#s 90

ota 1010


28/44

*o%#"#r t,# a/o"# norms ar# &at#& norms. ,#s# norms %#r# 'irms 'or 'u

caacit$. inc# t,# s,o construction acti"it$ to r#&uc# t,# norms to /# #"auat#& a 'r#s,.

!' in a r#ations,i /#t%##n costs o' oo&s #r#ssin t,at ,o% man$ tim#s stocks is

urc,as#& &urin t,is $#ar. *i, in"#ntor$ turn o"#r is mor# ro'it 'or t,# oranisation. !t

m#ans t,# #''ici#nt utiiation o' %orkin caita an& t,# stock in"#ntor$.

!n r#nc, an& non o/so#t# suc, coman$ can o#rat# on a sma ro'it marin %it,

a ar# sca# "oum# on o% turn in&icat#s a oor uait$ o' mark#tin #''ici#nc$ an& oor

mana#m#nt o' %orkin caita. E#cuti"# in"#ntor$ is aso 'or o% turn o"#r r#sutin in,#a"$ oss &u# to o/so#sc#. ,# ro/#m o' sar#s an& mana#m#nt %,ic, ar# &i''#r#nt

'rom ot,#r cass#s ar# initia$ r#s#nt#& t,# cat#ori#& o' sar#s ro"isionin o' sar#s+

cost o' sar#s+ ro# o' maint#nanc# /ut is /rou,t in t,# cont#nt o' so"in t,# sar#

arts ro/#m.

INVENTOR7 O5 VARIOUS STORES

,# #ntir# stor# oraniation is su/-&i"i& into 'our stor#s as@

1. =on& tor#s

2. t## tor#s

3. im/#r tor#s

?. ;#n#ra tor#s

Bo! S"o'es: -=on& stor#s ar# ain %it, a t,# imort#& mat#rias an& s#ci'ic

mat#rias articuar$ 'or s,i construction acti"iti#s. ,# mat#rias consumtion o' /on&

stori#s is contri/utin ma7or s,ar# a/out 04 to 04 o' t,# tota mat#rias cost not m#ant

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'or stocks. ,#$ ar# m#ant 'or imm#&iat# consumtion t,is mat#ria taior ma it#ms

accor&in to t,# si# an& sin o' t,# s,i. ,# imort#& mat#rias ar# ik# man #nin#+

&i#s# #n#rator s#ts+ an& ##ctrica #uim#nt.

Main s,i'ts an& ro##rs rar an& communication #uim#nt in *in&ustan

s,i$ar& imit#& r#mis#s t,#r# is a custom#rs o''ic# to ook a't#r a t,# matt#rs r#c#its

an& issu# o' imort#& mat#rias+ custom#rs "iianc# is r#uir#& on t,# s,i /ui&in

mat#rias stor# t,#$ ar#a a ##mt#& 'rom customs &ut$ t,#$ s,ou& us#& 'or s#ci'i#s

uros#.

S"eel S"o'es: -or t,# rocur#m#nt o' st## t,#r# ar# t%o inntin artm#nts.

1. Bra%in B#sin O''ic#@ - or t,# mat#ria 'or "#ss# construction ,i,#r "au# an&,i,#r uait$ mat#ria suc, as 6 ass+ at#s an& #ctions t,# mat#ria ma$ /#

/ot, in&i#nous an& imort#&.

2. t## tor#@ - or t,# mat#rias o' = cass an& c cass+ #ss#r cos# it#ms suc, as 'at #tc.

t,is t$# it#ms is ca#& as stan&ar& stock it#ms 'or t,#s# it#ms t,# st## an& stor#s is not

on$ rais# t,# urc,as#s innt /ut 'i#& on t,# /asis o' r#s#nt an& 'utur# consumtion

att#rn out to tota stor#s aroun& 804 mat#rias is 6 cat#or$ 'or %,ic, t,# sin an&

&ra%in o''ic# %i /# urc,as#& innt. or rocur#m#nt accor&in to t,# orr#& "#ss#.

R#mainin 205 mat#rias is stan&ar& stock it#ms 'or %,ic, st## is inti'i#& /$ s#ci'ic

co&i'ications as 6+ =+ < : B int#rnationa stan&ar&s. #ci'ic ra& st## is r#uir#& 'or

t,# construction o' oc#an- oin "#ss#s an& it s,ou& /$ at t,# ras c#rti'i#& /$

1. LR Lio$&s R#ist#r o' ,iin.

2. 6= 6m#rican =ur#au o' ,iin.

;#n#ra$ sti it is r#c#i"#& in stan&ar& si# o' t,ickn#ss+ #nt,+ /r#a&t,+ /ut it is

accountin in %#i,ti#st i.#. in m#tric ton#s+ t,# main sui#s ar# sai an& 'or#in counti#s

ik# aan. Kor#a+ #tcQ an& sam# rocur#& 'rom oca sui#rs. !' an$ r#7#ct#& mat#ria

t,at mat#ria is k#t s#arat#$+ on t,# a&"ic# o' urc,as# artm#nt &ra%in o''ic# t,at

mat#ria is ,an& o"#r to t,# sui#r /$ t,# st## stor#s.

29


30/44

Timbe' S"o'es: -im/#r stor#s is ain %it, rocur#m#nt storin an& issu# o'

tim#r mat#ria suc, as /u# in#+ t#ak sa %oo&+ in %oo&+ stain ant+ suortin /oar&

/a# %oo& stock an& aso 'or maint#nanc# %ork as #r t,# norms o' &ra%in o''ic#

#stimat#s an& ro&uction artm#nt r#uir#m#nts. im/#r stor#s ar# assistin t,#

urc,as# artm#nt in 'inaiation o' t,# t#nrs /$ stu&$ o' t,# 'oo%in@

inaiation o' t,# t#nr /$ stu&$ o' t,# 'oo%in@

1. Guait$.

2. B#i"#r$ P#rio&.

3. #ci'ication i# an& tan&ar&s.?. am#QQ.#tcQ

6e!e'al S"o'es: -,# 'unction o' t,# #n#ra stor#s is su/ &i"i& into "arious

rous /#caus# it as %it, "arious it#ms o' mor# t,os# ?0000 it#ms. ,#r# ar# %#

orani#& roc#&ur#s 'or accountin o' imort#& mat#rias customs o''ic# ro a"aia/#

%it, in t,# r#mis#r o' *in&ustan s,i$ar& imit#& to ook a't#r t,# matt#rs o' imort#& 'or

s,i construction is acc#t#& 'rom t,# a"#ra# cost m#t,o& 'or in"#ntor$ as %# as 'or t,#

consumtion o' st## tim/#r an& #n#ra stor#s =on& stor#s mat#ria is account#& s#ci'ic

accountin.

Re%ei+" Se%"io!: - R#c#it o' a t,# mat#rias o' incomin 'rom c#aranc#

artm#nt 'rom sui#rs &ir#ct$. Ent#r a t,# tais in a s#arat# r#ist#r as #r t,#

i"#r$ c,in#ss. K## t,# mat#rias at t,# #ari#r. Pr#aration o' MRR 'or acc#t#&

uantit$ as #r t,# ins#ction r#ort. *an&in o"#r t,# mat#rias aon %it, MRR to t,#

conc#rn#& rou (stor#).r#uatin t,# r#7#ct#& mat#rias #nt#r#& in a s#arat# r#ist#r an&

k#t t,#m unr sa'# con&itions. R#ist#r#& mat#ria is ,an& o"#r to t,# sui#rs on t,#

a&"ic# (r#7#ct#& r#run a&"ic#) ' urc,as# artm#nt.

6'o*+ Co!%e'!e s"o'es8: -,# #ntir# #n#ra stor#s acti"it$ stockin an& issuin

is ookin a't#r /$ 10 rous. ;#n#ra stor#s it#ms ar# aso i"#n 8 &iit cos startin

30


31/44

%it, 3+ ?+ 5+ : . ,# 'oo%in ta/# %i i"# a c#ar ia o' rou an& it is su''#rin

ar#as. ;rous an& its 'unctionin ar#as@

;rou B#ain Mat#rias

0.30 ;rou ;#n#ra stor#s

0.31 ;rou


32/44

1. ,# transaction moti"# #m,asi#s to t,# maintain in"#ntori#s to 'ascinat#&

smoot, ro&uction an& sa#s o#rations.

2. ,# r# cautionar$ moti"# %,ic, #m,asi#s t,# n##& to maintain in"#ntori#s to

uar& aainst t,# risk o' a r#&icta/# c,anin in man& sui#rs 'orc# an& ot,#r

'actor.

3. ,# s#cuation Moti"# %,ic, in'u#nc#s t,# cisions in incr#as# or cr#as#

in"#ntor$ #"#s to tak# a&"anta# o' ric# 'uctuatin at tim#s t,# in&ustr$ %ou&

ik# to accumuat# ra% mat#rias in anticiation o' ric# ris# 6 cat#or$ o'

morat# "au#s %it, morn at consumtion o' it#ms /ut t,# uantit$ is mor# in

consumtion.

No!e Mo&i!) a! S*'+l*s Ma"e'ials A!al(sis:,# *in&ustan s,i$ar& imit#& is t,# $#ar #rio& is consir#& as a #rio& 'or non-mo"in

it an$ it#ms ar# not consum#& 'or mor# t,an 3 $#ars t,an it is consir#& as non-mo"in.

urus mat#ria is t,# mat#rias %,ic, is not ,a"in an$ r#uir#m#nt in r#s#nt ra%

consumtion an& in a't#r consumtion.

,# 'oo%in ar# t,# main r#ason 'or t,# surus in"#ntori#s in *in&ustan s,i$ar&

imit#&.

Ec#ss Procur#m#nt@ - Norma$ st## an& ot,#r consuma/# ar# rocur#& at 54

#c#ss to t,# r#uir#m#nt to t,# ro&uction &ama#s.

Etra rocur#m#nt o' sar#s 'or #n#ra maint#nanc# o' an an& mac,in#r$

su/s#u#nt$ %,ic, is &at#&.

Bu# to c,an# o' B#sin o' t,# ro&uct (i.#. s,o construction)

ar# arts o' out &at#& ass#ts #tc.

6 t,# a/o"# surus mat#ria is unus#& ra% mat#ria t,# inti'ication o' surus

mat#ria is t,# imortant art in"#ntor$ contro c# is a&otin t,# 'oo%in roc#&ur#s

'or r#&ucin &isosin t,# surus an& non-mo"in in"#ntor$.

S"a)e > I

32


33/44

#arc,in 'or at#rnati"# us#>us#rs k##in t,#m in stock to m##t t,# 'utur#

r#uir#m#nt t,is can /# &on# %it, co-or&inat#s o' sin an& &ra%in o''ic#>s,i r#airs

artm#nt.

S"a)e > II

=$ intimat# to t,# ot,#r u/ic s#ctor unrstan&in u/icit$.

S"a)e > III

=$ cain u/ic t#nr an& auctions 'or &isosa. =#'or# cain u/ic t#nr t,#

r#s#r"# ric#s ar# to /# 'i#& 'or t,# surus non-mo"in it#ms /$ t,# ##rts committ##

t,# 'i#& r#s#r"#s ric#s ar# to /# aro"#& /$ t,# c,airman an& manain &ir#ctor.

Dis+osal A%"i&i"ies: -Bisosa acti"iti#s ar# ookin a't#r /$ &isosa s#ctor %,ic, is unr t,# contro o'

manain (mat#ria). ,# main acti"it$ o' t,# &isosa s#ctions is to &isos# t,# un%ant#&

mat#rias co #n&in stor#s+ scra mat#ria an& #tc.

A!al(sis o I!&es"i)a"io!

7ea' #0- #-2 #2-3 #3-4 #4-= #=-?

t## ?89.1 558?.8 1199.58 1199.53 8?.1 859.50

tor# s#ars 99.? 999.30 1095.1? 122.8? 250.? 2?81.22

im/#r 5?.08 81.9 5?.8 50.5 ?9.2 51.0

,i #uim#nt 0.22 0.22 - - - -

Loos# oos ?.9 9.05 10.1? 1?.95 - -

;oo&s-in-ransit 299.83 9.31 811.0 9?3.99 1502.0 222.5

Ot,#r mat#rias ?.01 .1 .8? 591.? - -

t## cut ric# an&

scra1.83 55.29 1.9 8.35 10?.80 130.?

ork in roc#ss at

cost53.18 ??9.09 - - - -

33


34/44

ork in roc#ss

atri/# "au#2519.01 1399.1 ?.95 9?3.9? 135?.00 2000.08

ota ?939.23 955?.2315828.9

9

13553.5

?2502.5 3?0.98

L#ss@- Pro"ision 318.00 318.?2 291.28 3?.81 2?.53 2?5.

=aanc# ?21.23 9235.811553.

1

13205.

325355.22 3215.31

,# task i' st##

stor#s : sar#s

#uim#nt to

mont,s

consumtions

.? 21.? ?59. 31.03 931.01

I!"e'+'e"a"io!: -

6s #r t,# a/o"# ta/#+ it is c#ar t,at t,# in"#ntor$ #"#s o' *in&ustan s,i$ar&

imit#& s,o%#& a 'uctuatin tr#n&. ,# sar# arts mor# or #ss r#main#& constant. ,#

usa# o' oos# toos s,o%#& a "#r$ #rratic tr#n& o' incr#as#& an& cr#as#& in a t,# si

$#ars o' stu&$. ,# in"#ntor$ #"#s o' st## aso in&icat# is 'uctuatin tr#n& t,# usa# o'

tim/#r ,as incr#as#& a 'uctuatin tr#n&. ,# usa# o' tim/#r ,as incr#as#& consira/#.

On# notic#a/# t,in a/out in"#ntor$ is t,# cr#asin #"# o' scra.

I!&e!"o'( "*'! O&e' Ra"io

,# ratio in&icat#s t,# #''ici#nc$ o' t,# 'irm o' s#in its ro&uct. !t is cacuat#& /$

&i"i&in t,# costs o' oo&s so& /$ t,# a"#ra# in"#ntor$.

,# cost o' oo&s so& is kno%n t,#n t,# in"#ntor$ turn o"#r ratio an& can /# comut#& /$

&i"i&in sa#s /$ a"#ra# is turnin into r#c#i"a/#s t,rou, sa#s. ,is ratio sini'i#s t,#

3?


35/44

iui&it$ to in"#ntor$. !t is us#& to m#asur# an& &isco"#r t,# ossi/# in t,# 'orm o' o"#r

stockin or o"#r "auation.


36/44

2003-04 2004-05 2005-06 2006-07 2007-08 2008-090

0.5

1

1.5

2

2.5

3

ITOR

6'a+,:

!n"#ntor$ urn o"#r Ratio

I!"e'+'e"a"io!:

3


37/44

6s #r t,# a/o"# ta/# it is c#ar t,at t,# in"#ntor$ #"#s o' *in&ustan ,i$ar&

Limit#& s,ou& a 'uctuatin tr#n&. ,# sar# arts mor# or #ss r#main#& constant. ,#

usa# o' oos# toos s,ou& a "#r$ #rratic tr#n& o' incr#as#& an& cr#as#& in a t,# si

$#ars o' stu&$ i' is c#ar t,at t,# stock ,as /##n utii#& mor# #''ici#nt$ to ro&uc# oo&s.

Ra/ Ma"e'ials I!&e!"o'( T*'!o&e' Ra"io:

,# ratio in&icat#s t,# #''ici#nc$ o' t,# 'irms ra% mat#rias consum#&. !t is cacuat#& /$

mat#ria consum#& &i"i& /$ a"#ra# mat#ria in"#ntor$.

Mat#ria


38/44

200-0 13205.3 19019.22 1.??

200-08 25355.22 22255.?8 0.88

2008-09 3215.31 2?.0? 0.1

6'a+,: Ra/ Ma"e'ial I!&e!"o'( T*'!o&e' Ra"io

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

RMITOR

38


39/44

I!"e'+'e"a"io!: -

,# ratio is cacuat#& to kno% t,# #"# o' ra% mat#rias in"#ntor$ ,#& /$ t,# 'irm

on an a"#ra#. ,is ratio in&icat#s t,# #''ici#nc$ %it, t,# 'irm con"#rts ra% mat#rias into

%ork in roc#ss. !t is c#ar 'rom t,# a/o"# ta/# t,at t,# ra% mat#ria in"#ntor$ turn o"#r

ratio o' *in&ustan ,i$ar& Limit#& is "#r$ #rratic tr#n& o' incr#as# an& cr#as# in a t,#si $#ars o' stu&$.

!n"#ntor$

Ba$s o' !n"#ntor$ *o&in HSSSSSSSSSSSSSSST30

a#s

#ars Ba$s o' !n"#ntor$ *o&in

2003-0? ?21.2>1219.9?T30H 131

200?-05 9235.81>239.1T30H 1?0

2005-0 1553.1>3108?.25T30H 180

200-0 13205.3>382.0T30H 123

200-08 25355.22>?89.3T30H 18

2008-09 3215.31>?90.?T30H 285

ORK IN PRO6RESS TURN OVER RATIO

39


40/44

,is is una/# 'or t,# coman$ in #sta/is,in t,# tim# a /#t%##n &i''#r#nt sta#s

in a ro&uction c$c# an& t,# #''ici#nt %it, t,# ro&uction c$c# #ts com#t#&. !n cas# o'

*in&ustan ,i$ar& imit#& %ork in ror#ss in"#ntor$ turn o"#r ratio ,as /##n 'uctuatin

o"#r t,# $#ar it is cacuat#& 'orm cost o' ro&uction &i"i& /$ a"#ra# %ork in ror#ss

in"#ntor$.


41/44

6'a+,: o' i! P'o)'ess T*'!o&e' Ra"io

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

0

2

4

6

8

10

12

Work in Progress Turnover Raio

?1


42/44

I!"e'+'e"a"io!:

,is ratio is cacuat#& in kno% t,# #"# o' %ork in roc#ss in"#ntor$ ,o& /$ t,#

'irm on an a"#ra#. !t in&icat#s t,# #''ici#nc$ %it, %,ic, t,# 'irm con"#rts %ork in

roc#ss into 'inis,#& oo&s 'rom t,is ratio it can int#rr#t t,at %ork in roc#ss is %,ic, in

t,# $#ar 2003 an& 2009 an& t,#n cr#as#& consira/$ o"#r t,# $#ar.

INVENTOR7 HOLDIN6 PERIOD

,# in"#ntor$ ,o&in #rio& in&icat#s o' in"#ntor$ an& 'inis,#& oo& into sa#s in a $#ar.

!n ot,#r %or&s it ,o&s a"#ra# in"#ntor$ 'or som# mont,s or &a$s.

30

!n"#ntor$ *o&in P#rio& H

!n"#ntor$ urno"#r Ratio (!R)

#ar !n"#ntor$urno"#r Ratio

!n"#ntor$

*o&in P#rio&

in Ba$s

2003-0? 2.5 131

200?-05 2.5 1?0

2005-0 2.00 180

200-0 2.92 123

200-08 1.93 18

2008-09 1.2 28

?2


43/44

6'a+,:

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

0

50

100

150

200

250

300

Invenor! "o#$ing Perio$

?3


44/44

I!"e'+'e"a"io!:

,# a/o"# ta/# an& ra, s,o%s t,# comarati"# #rio& o' in"#ntor$ ,o&in o' t,#

coman$. 6 'uctuatin ratio can /# o/s#r"#&.

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