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OPERATIONS MANAGEMENT II

A STUDY ONINVENTORY MANAGEMENTPRACTICE

SHREE AUTOMOBILES (HONDA)

GROUP # 2

PRESENTED BY:

Ayan Chatterjee 201105

Deepa Pillai 2011062

Dhairya Gada 20110

Haritima Wadhwani 2011087

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Shree Automobiles:

Is a Chain retail Sales & Service Center for theHonda Two-Wheelers division.

Started 2 years ago with Initial Investment of

Rs.10 Lacs. CEO: Mr. Ajay V. Deshmukh.

Location: Katol, Nagpur.

Service Capacity: 15 Two-Wheelers per day. Working :9 hrs per Day. 300 days pa. Saturdays

off.

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Existing Layout of Service Centre cum

Showroom

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INVENTORY

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Inventory Management Practice

The Model Followed by Shree Automobiles is

Fixed Time Period Model where new inventory is

ordered after every 30 days so that the inventory

of oil bottle reaches 400 to avoid stock out.

The inventory mainly consist of engine oil, brake

liners, nut bolts, grease, etc. less significant

inventory like- engine fan, silencers, tyre, horns,etc.

Manual Inventory auditing after every 30 days.

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Time between Orders:

Oil, Brake liners and Nut bolts : 30 days

Engine fan, silencer, Tyres, New battery etc: JIT

Safety Stocks:

Oil Bottle: 50

Brake liner: 15

lead time (days) =2

current inventory =50 time between orders (days) =30

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Fixed Time Period Model

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Suggestions for Improvement

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Inventory Management

1. Selective Inventory Control:

The Organization can use the VED analysis:

Vital: Engine oil and nut bolts

Essential: brake liners

Desirable: Other inventory like fan, silencersetc

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2. Ordering quantity:

The ordering quantity for oil is 350 bottles per month as per our calculations.

Assumption:

Service Level (z) = 90% = 1.645

Calculated figures:

Average Demand per day =12

No of working days in a month =25

Total Demand per month =300

Service Level (z) at 95% =1.645

Variation in Demand =3

Standard Deviation =1.73

Order Qty = Avg. demand + Safety Stock - Inventory on hand

Order Quantity (oil bottles) = 350

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3. Application of computers:

The company uses Manual Auditing every 30

days. If applicable they can opt for computertechnology which can be applied to increase

the efficiency of Inventory Management.

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Other Improvements

Average Demand

Average demand on Monday 12.5

Average demand on Tuesday 10.5

Average demand on Wednesday 10.8

Average demand on Thursday 11.5

Average demand on Friday 12

Average demand on Saturday 0

Average demand on Sunday 15

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Expertise employee for a particular work.

Remove bottleneck in the process

Sequential flow of activity to ease the process

of servicing.

Other Improvements Contd

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Conclusion:Most of the industrial units in India have adoptedcertain efficient techniques as VED analysis forcontrolling their inventories.

With the advent of electronic data processing,better selective inventory control measures areavailable, the adoption of which will lead to bettercontrol of inventory at a reduced amount of

investment.The justin-time inventory control technique canbe implemented only after improving the workenvironment.

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THANK YOU !!!