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INTRODUCTION

The management of assets in any organization is an essential part of overall

management. The enterprises, at the time of formation attach great importance to

fixed assets management, as a part of investment decision-making. Stocks form the

Importance Of Keeping Stocks

The time lag present in the supply chain , from supplier to production

department, requires maintenance of certain level of inventory

Inventories are maintained as buffer stocks to meet uncertainties in demand,supply and movements of goods.

Inventories help in smooth functioning of production of goods and thusenhances working of the organisation.

Sometimes, due to some reasons the stocks reach zero level. This situation isreferred to as stock out condition.

A stockout, or out-of-stock (OOS) event is an event which causes inventory to be exhausted. It is

a situation where the demand or requirement for an item cannot be fulfilled from the current

inventory. It is an informal situation in which a company sells its entire inventory. The term

usually refers to situations where demand exceeds supply, causing the company to run out of

inventory earlier than expected.

Consequences Of Stock Out Condition

Loss of sales

Decrease in efficiency of work

Production gets hampered

Delay in future projects

Customers do not get timely delivery of goods, thus this condition damages the company

and customer relationship

REVIEW OF LITERATURE

http://en.wikipedia.org/wiki/Inventoryhttp://www.businessdictionary.com/definition/demand.htmlhttp://www.businessdictionary.com/definition/current.htmlhttp://www.businessdictionary.com/definition/inventory.htmlhttp://financial-dictionary.thefreedictionary.com/Sellhttp://financial-dictionary.thefreedictionary.com/Inventoryhttp://financial-dictionary.thefreedictionary.com/Demandhttp://financial-dictionary.thefreedictionary.com/Supplyhttp://www.businessdictionary.com/definition/demand.htmlhttp://www.businessdictionary.com/definition/current.htmlhttp://www.businessdictionary.com/definition/inventory.htmlhttp://financial-dictionary.thefreedictionary.com/Sellhttp://financial-dictionary.thefreedictionary.com/Inventoryhttp://financial-dictionary.thefreedictionary.com/Demandhttp://financial-dictionary.thefreedictionary.com/Supplyhttp://en.wikipedia.org/wiki/Inventory

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Store

Store is an area set aside into which all the items and materials required for

production and/or for sale/ distribution are received, where they are housed for

safekeeping, and from which they will be issued as required.

Functions Of Store

1. Receiving of materials from the suppliers.

2. Inspecting the materials.

3. Stacking the materials to their designated godowns/ racks / bins.

4. Issue of materials.

Apart from these four functions there are two other functions of store

department of Usha Martin Ltd :-

i. Maintaining Calibration Certificate of weighing machines fallingunder four quarters of a year ( viz January- March, April-June, July-

September, October- December)

ii. Maintaining all the explosive licenses such as

License to import and store Petroleum Products

License to store compressed gases in cylinder

License to store butane gas.

Besides the above functions, the store department has the responsibility ofproviding service to the other departments, which can be explained through the

following :-

i. The Production Department

The store department makes raw materials and tools available for continuous

production. But it requires adequate information about the future expected

needs of the quality and quantity of items, so that it can fulfil those

requirements.

ii. The Sales Department The store department should contain all the items needed for sale in a

company and, similarly, it is the responsibility of the sales department to sell

all the items kept in the store. The sales department must give adequate

information to the store about future sales and trends, and help in planning

orders, setting safety stock level, allocating storage place.

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iii. The Purchasing Department

The store department must keep the purchase department up to date with the

information about the level of inventories. The purchase department ensure

timely delivery of materials required by the company.

iv. The Maintenance or Engineering Department The store department ensures that all the spares, tools, equipment and

materials are available which are required for maintenance. In return, the

store gets information about the maintenance plans and requirements.

v. The Accounts Department

It requires information from stores about the value of stock, about any

losses, about receipt of items for which payment is made, about the stock

issued, etc.

Objectives Of Store

The objectives of the store department are :-

1. To protect the items from loss occurring due to damage, theft, pilfering or

poor storage.

2. To control the movements of the items coming in and going out of the store

by maintaining their records

3. To minimize the inventory carrying cost.

4. To avoid over-stocking and under- stocking of materials.

Store Department of Usha Martin Ltd

It is responsible for taking care of all the raw materials coming to the company and used in the

production. There are more than 350,000 items kept in the stores of Usha Martin Ltd.

Operation Flow Chart For Stores Department

Requirement from

Department

in the form of indent

Indent is ok

(with material code)

Raised Indent

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There are two types of items kept in the stores of Usha Martin Ltd :-

1. Indented/ Departmental Items

2. SIC Items

SIC Items or Statistical Inventory Control Items have basically two features :-

They are fast moving items

They are consumed interparallely in the departments.

Information To Purchase And

Concerned Department

Function In Purchase

Department

Receive Materials From

Suppliers

Verification Of Paper

And Materials

Manual GR Booking

Entry In BANN

Print Tag And Inspection

Report

Inspection Of Materials By User

Department

Material Is OK Material Is Not OK

Stacking In

Bin

Print Rejection

Advice

Requisition Slip From

Department (with

Material Code and

Bin No)

Sent Back Material

To Supplier

Check In Bin And

Issue To Department

File Issue Slip

Record In File

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There are nine types of Ledgers starting from Ledger 1 to Ledger 9

1 Raw Material

2 Packing

3 Stores and Sphere

4 Drawing

5 Fuel

6 Imported Raw Material

7 Project

8 Imported Stores and Spheres

9 Imported Drawing

Apart from the above ledger, there is another type of ledger known as B- ledger or miscellaneous ledger

which contains stationery and medicines.

Inventory Management

According to American Production And Inventory Society " Inventory Management is the branch of

business management concerned with planning and controlling."

Inventory management emphasises the need to maintain inventory of raw material to facilitate smooth

and efficient production and sales operation. It helps in maintaining minimum investment in inventoriesto maximise profitability.

Inventory Control Techniques

The inventory control techniques are needed in a company to manage its inventory in an effective way.

There are several inventory control systems ranging from simple to very complicated system. The nature

and size of business dictate the choice of the inventory control technique.

ABC analysis, also referred to as Pareto analysis, is a method of classifying items, events, or

activities according to their relative importance. It is frequently used in inventory management

where it is used to classify stock items into groups based on the total annual expenditure for, or

total stockholding cost of, each item. As Usha Martin Ltd is a very large firm, it has to maintain

many types of inventories. It is not desirable to keep the same degree of control on all the items.

The firm should pay maximum attention to those items whose value is the highest. The firm

should , therefore, classify inventories to identify which items should receive the most effort in

controlling. It is a value based analysis. The high value items are classified as "A items" and

would be under the tightest control. "C itmes" represent relatively least value and would be under

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simple control. "B items" fall in between these two categories and require reasonable attention of

management.

Class Consumption per annum Time period for storing

A Above 1.5 Lac 1 month

B 25000 to 1 lac 4 months

C below 25000 12 months

Inventories are stock of the product which a company is manufacturing for sale and components that

make up the product. Inventory is a stock of goods and resources that is stored for future production or

for meeting future demand.

Lead Time It is the time period from the date of requisition to delivery of goods. It is the latency

(delay) between the initiation and execution of a process.

Re- order Point- The stock level at which new orders must be placed. To determine the re-order point

under certainity , we should know the lead time, average consumption and safety stock of a particular

item.

http://en.wikipedia.org/wiki/Latencyhttp://en.wikipedia.org/wiki/Latency

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Calculation

Re order point = (Average Consumption multiplied by Lead Time + Safety stock)

Safety Stock-

Safety stock is a term used by inventory specialists to describe a level of extra stock that is maintainedbelow the cycle stock to buffer against stockouts. Safety Stock (also called Buffer Stock) exists to counter

uncertainties in supply and demand. Safety stock (also called buffer stock) is a term used by logisticians

to describe a level of extra stock that is maintained to mitigate risk ofstockouts (shortfall in raw material

or packaging) due to uncertainties in supply and demand. Adequate safety stock levels permit business

operations to proceed according to their plans.

Research Methodology

Type of research

http://wiki/Logisticshttp://wiki/Stockouthttp://wiki/Logisticshttp://wiki/Stockout

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This project A Case Study of Reasons For Stock Out Condition Of SIC Items In

Usha Martin Ltd as an analytical research.

Analytical Research is defined as the research in which, researcher has to use facts or

information already available, and analyze these to make a critical evaluation of the facts,

figures, data or material.

The project includes finding of primary data and secondary data. It includes surveys and fact-

finding enquiries. So, the project basically covers description of state of affairs, as it exists at

present. Here in this case, the researcher does not have control over the variables. Here, the

job done as a researcher is to use the facts and information already available. The same set of

information is analyzed to make the critical evaluation of the material.

Data collection methods

Sources of data can be classified into two types they are:-

Primary data

Secondary data

Primary data:Primary data may be described as those data that has been

observed by the researchers for the first time. The primary data was obtained

through personal interaction with company officials during the internship period.

Secondary data: Secondary data are those data that have been complied already

before conducting the research. Secondary data may be internal data as well as

external data. Internal data are collected from the companys records. External data

are collected from outside the company.

The various sources of secondary data are,

Company websites

Record of the SIC items received from BANN

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