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AN ANALYSIS ON INVENTORY MANAGEMENT AT
WHIRLPOOL OF INDIA LIMITED, PUDUCHERRY
SUMMER PROJECT REPORT
Submitted by
R.GOPAL
REGISTER NO: 27348312
Under the Guidance of
M!. R. HEMALATHA, MBA.,
Faculty, Department of Management Studies
in partial fullfilment for the award of the degree
of
MAS!" #$ BUS%&!SS A'M%&%S"A%#&
DEPARTMENT OF MANAGEMENT STUDIES
SRI MANA"ULA VINAYAGAR ENGINEERING COLLEGE
PONDICHERRY UNIVERSITY
PUDUCHERRY
S!(!MB!"- )**+
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SRI MANA"ULA VINAYAGAR ENGINEERING COLLEGE
MADAGADIPET, PUDUCHERRY
DEPARTMENT OF MANAGEMENT STUDIES
#ONAFIDE CERTIFICATE
his to certify that the project wor entitled $AN ANALYSIS ON INVENTORY
MANAGEMENT AT WHIRLPOOL OF INDIA LIMITED, PUDUCHERRY% is a bonafide
wor done by R.GOPAL ®ISTER NO: 27348312' in partial fulfilment of the reuirement
for the award of Master of Business Administration by (ondicherry Uniersity durin/ the
academic year )**+ 0 )**1.
GUIDE HEAD OF DEPARTMENT
Submitted for 2ia-2oce !3amination held on
E(TERNAL E(AMINER
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AC"NOWLEDGEMENT
$irst and foremost, % than the God for his substantial blessin/ and mercy at all sta/es in
the completion of the project.
% tae this opportunity to e3press my deep sense of /ratitude to SHRI N."ESAVAN,
$ounder 4hairman, SHRI M.DHANASE"ARAN, Mana/in/ 'irector and SHRI
S.V.SUGUMARAN, 2ice-4hairman of our colle/e for their /ood wishes for this project.
% e3press my immense /ratitude to our (rincipal
DR. V.S.".VEN"ATACHALAPATHY for his support and encoura/ement for the completion
of my project.
% e3tend the immense /ratitude to the 5ead of the 'epartment MR. S.JAYA"UMAR for
his motiation, inspiration, and encoura/ement for the completion for my project.
he aluable and unflinchin/ reuital support in this !ndeaor
MRS. R.HEMALATHA my internal /uide, 'epartment of Mana/ement Studies whose
assistance was immeasurable to the completion of this project.
% am sincerely thanful to MR. N.RAMESH, $inance Mana/er, 6hirlpool of %ndia
7imited 86#%79 for his help and support throu/hout the project. % e3tend my thans to MR.
".VIJAY GANESH, Mana/er of Materials (lannin/ for his help. % e3tend my sincere thans and
my deep sense of /ratitude to MR. L.GANESH "UMAR , 'eputy Mana/er-Material (lannin/
for his ind assistance and MR. R.VISHNU PRATAP, !3ecutie-$inance, who were also my
!3ternal Guides.
% would also lie to than all the staff of the or/ani:ation for helpin/ me directly and
indirectly to conclude this wor. 7ast, but not the least, my heart felt /ratitude to my parents,
relaties and my friends for their constant encoura/ement, support, help and aluable adice to
mae this project a success.
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ABS"A4
!ery or/ani:ation needs inentory for smooth runnin/ of its actiities. %t seres
as a lin between production and distribution processes. he inestment in inentories constitutes
the most si/nificant part of current assets;worin/ capital in most of the undertain/s. hus, it is
ery essential to hae proper control and mana/ement of inentories. he purpose of inentory
mana/ement is to ensure aailability of materials in sufficient uantity as and when reuired and
also to minimise inestment in inentories. "aw materials, /oods in process and finished /oods
all represent arious forms of inentory. !ach type represents money tied up until the inentory
leaes the company as purchased products. Because of the lar/e si:e of the inentories
maintained by firms, a considerable amount of funds is reuired to be committed to them. %t is
therefore absolutely imperatie to mana/e inentories efficiently and effectiely in order to aoid
unnecessary inestments. A firm ne/lectin/ the mana/ement of inentories will be jeopardi:in/
its lon/ run profitability and may fail ultimately. he reduction in e3cessie inentories carries a
faorable impact on the company
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CONTENTS
CHAPTER TITLES PAGE NO.
7%S #$ AB7!S
7%S #$ 45A"S
%
%&"#'U4%#&
("#$%7! #$ 5! 4#M(A&@
&!!' $#" 5! SU'@
)
%% "!2%!6 #$ 7%!"AU"! C
%%% #BD!4%2!S #$ 5! SU'@ E
%2 "!S!A"45 M!5#'#7#G@ E)
2 'AA A&A7@S%S A&' %&!"("!A%#& EF
2%$%&'%&GS #$ 5! SU'@,
SUGG!S%#& A&' "!4#MM!&'A%#&SF
2%% 4#&47US%#& )
2%%%7%M%A%#&S #$ 5! SU'@
S4#(! $#" 5! $U5!" SU'@E
F
B%B%7%#G"A(5@
LIST OF TA#LES
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TA#LE NO. NAME OF THE TA#LE PAGE NO.
.. !4#M%4 #"'!" ?UA&%@ EF
.). SA$!@ S#4H E+
.E. AB4 A&A7@S%S F
.F. $S& A&A7@S%S FF
.. 4A74U7A%#& #$ %&2!&#"@ "!&' F
..) %&2!&#"%!S (!"4!&AG! FC
.C. %&2!&#"%!S U"!" "A%# = 2!7#4%@ F1
LIST OF CHARTS
CHART NO. NAME OF THE CHART PAGE NO.
.E. AB4 A&A7@S%S F
.F. $S& A&A7@S%S FF
..) "!&' #$ %&2!&#"@ F+
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CHAPTER)I
1.1 INTRODUCTION
%nentory control is itally important to almost eery type of business, whether product or
serice oriented. %nentory control touches almost eery facets if operations. A proper balance
must be struc to maintain proper inentory with the minimum financial impact on the customer.
%nentory control is the actiities that maintain stoc eepin/ items at desired leels. %n
manufacturin/ since the focus is on physical product, inentory control focus on material control.
I%nentoryJ means physical stoc of /oods, which is ept in hands for smooth and
efficient runnin/ of future affairs of an or/ani:ation at the minimum cost of funds bloced in
inentories. he fundamental reason for carryin/ inentory is that it is physically impossible and
economically impractical for each stoc item to arrie e3actly where it is needed, e3actly when it
is needed.
%nentory mana/ement is the inte/rated functionin/ of an or/ani:ation dealin/ withsupply of materials and allied actiities in order to achiee the ma3imum co-ordination and
optimum e3penditure on materials. %nentory control is the most important function of
inentory mana/ement and it forms the nere center in any inentory mana/ement or/ani:ation.
An %nentory Mana/ement System is an essential element in an or/ani:ation. %t is comprised of a
series of processes, which proide an assessment of the or/ani:ation
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1.2 PROFILE OF THE COMPANY
1.2.1 WHIRLPOOL CORPORATION
6hirlpool 4orporation is the world-- 4anada,
United States, Me3ico, Ar/entina, Bra:il, Sloaia, Germany, Sweden, $rance, %taly, South
Africa, 4hina and %ndia and marets products in more than +* countries under major Brands 8)C
includin/ Affiliates9 names such as 6hirlpool, Hitchen Aid, "oper, !state, Baunects, %/nis,
7aden, %n/lis, Braotemp, 4rolls, Acros and 4onsul. 6hirlpool is also the principal supplier to
Searo, "oebuc and company of many major home appliances mareted under the Henmore brand names. 5ead uartered at Benton 5arbour, Michi/an, U.S.A, 6hirlpool 4orporation is the
world
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1.2.2 WHIRLPOOL CORPORATION TODAY1.2.2 WHIRLPOOL CORPORATION TODAY
#UILDING CUSTOMER LOYALTY WORLDWIDE
6hirlpool 4orporation arried in the new century and millennium as the world
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1.2.3 *+ HISTORY OF WASHING MACHINE
Ancient peoples cleaned their clothes by poundin/ them on rocs or rubbin/ them with
abrasie sands and washin/ the dirt away in local streams. !idence of ancient washin/ soap was
found at Sapo 5ill in "ome, where the ashes containin/ the fat of sacrificial animals was used as
soap.
he earliest washin/ OmachineO was the scrub board inented in ++. American, Dames
Hin/ patented the first washin/ machine to use a drum in 1, the drum made Hin/Ps machine
resemble a modern machine, howeer it was still hand powered. %n 11, 5amilton Smith
patented the rotary washin/ machine. %n 1+F, 6illiam Blacstone of %ndiana built a birthday
present for his wife. %t was a machine, which remoed and washed away dirt from clothes. he
first washin/ machines desi/ned for use in the home. he 5urley Machine 4ompany of 4hica/o,
%llinois introduced the first electric-powered washin/ machine 8the hor9 in *1. Ala D. $isher
was the inentor. he machine was a drum type with a /alani:ed tub and an electric motor, for
which a patent was issued on Au/. , *.
he 6hirlpool 4orporation started in as the Upton Machine 4o., founded in St.
Doseph, Michi/an, to produce electric motor-drien wrin/er washers. US electric washin/
machine sales increased after 6orld 6ar %, reachin/ E,*** units in )1. he main reason why
so many people bou/ht the washin/ machine was because it saed people lots of time in domestic
tass, and the result was that societyPs e3pectations for cleanliness went up.
%n , production of !uropePs first automatic washin/ machines started. %n +1, the
first microchip-controlled automatic washin/ machines were produced. 6asher desi/n improed
maredly durin/ the E*sL the mechanism was now enclosed within a cabinetL more attention
was paid to electrical safetyL spin dryers were introduced, to replace the dan/erous power
wrin/ers of the day.
Bendi3 introduced the first automatic washin/ machine in E+, hain/ applied for a
patent in the same year. General !lectric introduced the first top loadin/ automatic also in F+.
his machine had many of the features that are incorporated into modern machines. A lar/e
number of US manufacturers introduced competin/ automatic machines 8mainly of the top
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loadin/ type in the late F*
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198: #he /lisha 0ra% II esearch 2 /ngineering $enter was
completed in (enton arbor. In the same %ear the compan%'s re&enues
crossed the legendar% 31 (illion mar* or the irst time.
19"8: Within a decade compan% doubled its eat o 31 (illion mar* and
reached the 3 billion re&enue le&el.
198: #he '5itchen -id' di&ision o obart $orporation was purchased.
198": Whirlpool tied6up with Sundaram $la%ton 7td. o India to orm
#S Whirlpool 7td.
1989: #his was a historic %ear since the re&enues catapulted to heights
o o&er 3 (illion mar*. -lso the oint &enture with N..;hilips o
Netherlands called Whirlpool /urope (.. was ormed to manuacture
and mar*et appliances in /urope.
199cellence S%stem which is a #?, program dedicated to
e>ceeding customer e>pectations. #he &ision to globali)e 'Whirlpool
$orp'. was reali)ed in the same %ear.
199@: First time Whirlpool became the No.1 stand6alone brand in A5
Ireland Netherlands and (elgium
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199!: Whirlpool $orp. ac+uired maorit% o sta*e in the #S Whirlpool
7td. #he B$ manuacturing acilit% o 5el&inator India was also
ac+uired.
199: Whirlpool Washing ,achines 7td. and 5el&inator India 7td.
merged together to orm Whirlpool o India 7td.
1998: #his %ear ga&e birth to a new compan% &ision that sa%s C/&er%
ome /&er%where with ;ride ;assion 2 ;erormance.C
1999: Whirlpool o India crossed the milestone o 1 million sales o
appliances.
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1.2.4 #OARD OF DIRECTORS
• 'alton &i/el Garric 'QSila 84hairman9
• "aj Dain 8Mana/in/ 'irector9
• "obert 7awrence Min
• SS "aman
• H.2. 4handrasearan
• SD Scarff
• Anand Bhatia
1.2. *+ WHIRLPOOL VISION STATEMENT
E/0 H0 E/05600. W6 P90, P+!!, P0;+
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6ill create the world -
P90 in their wor and each other
P+!! for creatin/ unmatched customer loyalty for their brands
P0;+ ?0?@0N 5> >060N 0/05600.
1.2. *- WHIRLPOOL MISSION STATEMENT
he mission of the corporate is that the demand of their seles so as to care their
customers and they will sere with pride in eery home and brin/ prosperity to their inestors
and customers. hey are prepared to chan/e the standards of their industry and be the !ny of
their competitors. hey will be leaders in home appliances, which all others start to emulate.
1.2.B CORE COMPETENCIES
• I/+: Uniue and compellin/ solutions alued by our customers and ali/ned to our
brands create competitie adanta/e and differentiated shareholder alue.
• O?0++@ E
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• C=!0 E
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he refri/erator facilitated at $aridabad in 5aryana manufactures direct cool.
"efri/erators ran/in/ from C liters to E* liters. %nfusion of technolo/y and up /radation of
machinery alon/ with streamlinin/ of processed has enhanced the plant capacity from +,**,***
units to 1,*,*** units annually. 6hirlpool
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Air (urifiers, Automatic 'ryers, Automatic 6ashers, Built-in #ens,
'ehumidifiers, 'ishwashers, free:ers, 5ot 6ater 5eaters, 52A4, Microwae #ens, "an/es
8Gas and !lectric, $ree:ers, Side-by-Side9, "oom Air 4onditioners, rash 4ompactors, washers.
"
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6hirlpool of %ndia limited, washer unit, (uducherry was the first manufacturin/ enture
of the 6hirlpool 4orporation, USA, the world
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6hitema/ic 5 +* | + /
6hitema/ic S +* | + /
6hitema/ic Super-Soa | C.) H/
6hitema/ic ! C | C.) H/
6hitema/ic SC*-Bu:: | C H/
6hitema/ic S% C* | C.) H/
5 C | C H/
$-C | C H/
$( C | C H/
$( C* '7R | C H/
$( Splash | H/
Sensation !R | C. H/
Sensation !M | C. H/
1.2.1 CLASSIFICATION OF WASHING MACHINE
1.2.11 ACHIEVEMENTS
6hirlpool came to %ndia on the crest of a lon/ trail of achieements and has since
furthered this record. By end-, 6hirlpool became the lar/est sellin/ appliance brand in the
country. A couple of years later, it also became the lar/est e3porter of home appliances from
%ndia. %n the course of this /rowth and deelopment, 6hirlpool has also achieed immense brand
euity in the %ndian maret. 6hirlpool has successfully established new rules of maretin/ and
brandin/ in the home-maret sector. %ts rials hae adopted the new practices, but the 6hirlpool
brand stands out to the e3tent that authoritatie sureys reported it to be the most preferred brand
in refri/erators and washin/ machines in )**E. 8Millward Brown Brand rac9.
6hirlpool of %ndia e3ports to more than * hi/h-alue marets in Asia and other parts of
the world as well. %ts products are customi:ed to the local standards and different needs of each
of these marets. hese ualities of 6hirlpool are e3emplified in its %ndian sales as well. he
company has set up a hi/hly euipped product deelopment centre in (une, which proides
/lobal desi/n serices to three other 6hirlpool research and deelopment facilities based in
Bra:il, %taly and the US. %ndeed, the %ndian operations of 6hirlpool are a ery important
contributor to its /lobal ision of OBein/ in eery home, eerywhereO. %n washer products,
6hirlpool was a/ain the first to come out with a 4ombimatic 0 a sin/le tub semi-automatic
washin/ machine that did away with the hassle of shiftin/ clothes from one tub to another.
1.2.12 C?+ ! !65 - + ;@+ O>++ S=
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P UR C HA S E MA NA GE R
S 1
P R O C E S S
E N GI NE E R I N G DE V E OL OP ME NT MA NA GE R
S
S ! M
A NA GI N G DI R E C T OR
V I C E P R E S I DE NT
GE NE R A L MA NA GE R
"P # ant O p er at i on $
S E NI OR
MA NA GE R
P R OD U C T
I ON
MA NA GE R
% UA L I T &
MA NA GE R
' I NA N C E
MA NA GE R
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R E S O
UR C E MA NA GE R
ME D
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R E GI ONA L T E C H(
C
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MA NA GE R
S
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S
-
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1.3 NEED FOR THE STUDY
- - - , S 1
' e p a r t m e n t a l S t a f
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!ery or/ani:ation needs inentory for smooth runnin/ of its actiities. %t seres as a lin
between production and distribution processes. he inestment in inentories constitutes the most
si/nificant part of current assets;worin/ capital in most of the undertain/s. hus, it is ery
essential to hae proper control and mana/ement of inentories. he purpose of inentory
mana/ement is to ensure aailability of materials in sufficient uantity as and when reuired and
also to minimise inestment in inentories. So, in order to understand the nature of inentory
mana/ement of the or/ani:ation, % too this %nentory Mana/ement as a topic for my project, to
/ie findin/s and su//estions by adoptin/ and analy:in/ different inentory control techniues.
CHAPTER)II
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REVIEW OF LITERATURE
2.1 MEANING OF INVENTORY
%nentory /enerally refers to the materials in stoc. %t is also called the idle resource of a
company. %nentories represent those items which are either stoced for sale or they are in the
process of manufacturin/ or they are in the form of materials which are yet to be utili:ed.
%t also refers to the stocpile of the products a firm would sell in future in the normal
course of business operations and the components that mae up the product.
%nentory is a detailed list of those moable items which are necessary to manufacture a
product and to maintain the euipment and machinery in /ood worin/ order.
2.2 TYPES OF INVENTORIES
A manufacturin/ firm /enerally carries the followin/ types of inentories>
• "aw Materials.
• Bou/ht out parts.
• 6or-in-process inentory 86%(9.
• $inished /oods inentories.
• Maintenance, repair and operatin/ stores.
• ools inentory.
• Miscellaneous inentory.
•Goods in transit.
• Goods for resale.
• Scrap Material.
2.3 REASONS FOR HOLDING INVENTORY
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• o stabili:e production.
• o tae adanta/e of price discounts.
• o meet the demand durin/ the replenishment period.
• o preent loss of orders.
• o eep pace with chan/in/ maret conditions.
2.4 MOTIVES OF HOLDING INVENTORIES
• he ransaction Motie which facilitates continuous production and timely e3ecution of
sales orders.
• he (recautionary Motie which necessities the holdin/ of inentories for meetin/ the
unpredictable chan/es in demand and supplies of materials.
• he Speculatie Motie which induces to eep inentories for tain/ adanta/e of price
fluctuations, sain/ in re-orderin/ costs and uantity discounts etc.,.
2. COSTS ASSOCIATED WITH INVENTORY
•
(roduction cost.
• 4apital cost.
• #rderin/ cost.
• 4arryin/ cost.
• Shorta/e cost.
2.B INVENTORY CONTROL
he main objectie of inentory control is to achiee ma3imum efficiency in production =
sales with minimum inestment in inentory.
%nentory control is a planned approach of determinin/ what to order, when to order and
how much to order and how much to stoc, so that costs associated with buyin/ and storin/ are
optimal without interruptin/ production and sales.
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2.7 #ENEFITS OF INVENTORY CONTROL
he benefits of inentory control are>
• %mproement in customers< relationship because of the timely deliery of /oods and
serices.
• Smooth and uninterrupted production and hence, no stoc out.
• !fficient utili:ation of worin/ capital.
• !conomy in purchasin/.
• !liminatin/ the possibility of duplicate orderin/.
2.8 PRINCIPLES OF INVENTORY CONTROL
• %nentory is only created by spendin/ money for materials and the labour and oerhead to
process the materials.
• %nentory is reduced throu/h sales and scrappin/.
• Accurate sales = production schedule forecasts are essential for efficient purchasin/,
handin/ = inestment in inentory.
• Mana/ement policies which are desi/ned to effectiely balance si:e and ariety of
inentory with cost of carryin/ that inentory are the /reatest factor in determinin/
inentory inestment.
• $orecasts help determine when to order materials. 4ontrollin/ inentory is accomplished
throu/h schedulin/ production.
• "ecords do not produce control.
• 4ontrol is comparatie = relatie, not absolute. %t is e3ercised throu/h people with
aryin/ e3periences and jud/ment rules = procedures establish a base from which the
indiiduals can mae ealuation and decision.
• 6ith the consistent practices bein/ followed, inentory control can become predictable
and properly related to production and sales actiity.
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2. INVENTORY CONTROL TERMINOLOGY
D0+9:
%t is the number of items reuired per unit of time. he demand may be either
deterministic or probabilistic in nature.
O90
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ri/ht uantity to be ordered is one that stries a balance between the two opposition costs. his
uantity is referred to as I!conomic #rder ?uantityJ.
2.11 ECONOMIC ORDER UANTITY
MEANING
A decision about how much to order has /reat si/nificance in inentory mana/ement.
he uantity to be purchased should neither be small nor bi/ because costs of buyin/ and
carryin/ materials are ery hi/h. !conomic order uantity is the si:e of the lot to be purchased
which is economically iable. his is the uantity of materials which can be purchased at
minimum costs. Generally economic order uantity is the point at which inentory carryin/ costs
are eual to order costs. %n determinin/ economic order uantity it is assumed that cost of
mana/in/ inentory is made up solely of two parts i.e., orderin/ cost and carryin/ cost. he cost
relationships are shown in below fi/ure.
FORMULA FOR CALCULATING ECONOMIC ORDER UANTITY *EO
E
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?T !conomic #rder ?uantity
#rder ?uantity
2.12 SAFETY STOC"
MEANING
he economic order uantity formula is deeloped based on assumption that the demand
is nown and certain and that the lead time is constant and does not ary. %n actual practical
situations, there is an uncertainty with respect to the both demand as well as lead time. he total
forecasted demand may be more or less than actual demand and the lead time may ary from
estimated time. %n order to minimi:e the effect of uncertainty due to demand and the lead time, a
firm maintains safety stoc, resere stocs or buffer stocs.
he safety stoc is defined as Ithe additional stoc of material to be maintained in order
to meet the unanticipated increase in demand arisin/ out of uncontrollable factorsJ.
%n simple it is tells about which is used to protect a/ainst uncertainties.
Because it is difficult to predict the e3act amount of safety stoc to be maintained, by
usin/ statistical methods and simulation, it is possible to determine the leel of safety stoc to be
maintained.
DETERMINATION OF SAFETY STOC"
%f the leel of safety stoc is maintained is hi/h, it locs up the capital and there is a
possibility of ris of obsolescence. #n the other hand, if it is low, there is a ris of stoc out
because of which there may be stoppa/e of production. 6hen the ariation in lead time is
predominant, the safety stoc can be computed as>
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Safety Stoc 8Ma3imum 7ead time- &ormal 7ead time9 T 'emand
SAFETY STOC"
he serice leel of inentory thus depends upon the leel safety stocs. 7ar/e the
safety stocs, there is a lesser ris of stoc out and, hence, hi/her serice leel. Sometimes hi/her
serice leels are not desirable as they result in increase in costs, thus, fi3in/ up a safety stoc
leel is critical. Usin/ past date re/ardin/ the demand and lead time data, reliability of suppliers
and serice leel desired by mana/ement, safety stoc can be determined with accuracy.
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2.13 A#C ANALYSIS
MEANING
he inentory of an or/ani:ation /enerally consists of thousands of items with aryin/
prices, usa/e rate and lead time. %t is neither desirable nor possible to pay eual attention of all
items.
AB4 analysis is a basic analytical tool which enables mana/ement to concentrate its
efforts where results will be /reater. he concept applied to inentory is called as AB4 analysis.
Statistics reeal that just a few items account for bul of the annual consumption of the
materials. hese few items are called A class items which hold the ey to business. he other
items nown as B = 4 which are numerous in number but their contribution is less si/nificant.
AB4 analysis thus tends to se/re/ate the items into three cate/ories A,B = 4 on the basis of their
alues. he cate/ori:ation is made to pay ri/ht attention and control demanded by items.
FEATURES OF A#C ANALYSIS
A Class (High Value) Class (Moderate Value) C Class (!ow Value)
. i/ht control on
stoc leels
). 7ow safety stoc
E. #rdered freuently
F. %ndiidual postin/ in
stores
. 6eely control
re ports
Moderate control
Medium
7ess freuently
%ndiidual
Monthly control
7ess control
7ar/e
Bul orderin/
4ollectie postin/
?uarterly control
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C. 4ontinuous effort to
reduce lead time
Moderate efforts Minimum efforts
ADVANTAGES
• his approach helps the mana/er to e3ercise selectie control = focus his attention only
on a few items.
• By e3ercisin/ strict control on A class items, the materials mana/er is able to show the
results within a short period of time.
• %t results in reducer clerical costs, saes time and effort and results in better plannin/ and
control and increased inentory turnoer.
• AB4 analysis, thus, tries to focus and direct the effort based on the merit of the items and,
thus, becomes an effectie mana/ement control tool.
2.14 FSN ANALYSIS
All the items in the inentory are not reuired at the same freuency. Some are reuired
re/ularly, some occasionally and some ery rarely. $S& analysis classifies items into fast
moin/, slow moin/, non moin/ items.
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2.1 INVENTORY TURNOVER RATIO
Hohler defines inentory turnoer as Ia ratio which measures the number of times a
firm
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2.1B A STUDY ON INVENTORY MANAGEMENT #Y RAMYA
%n this reiew Miss. "AM@A, who as done the project about %nentories at 6#%7, it is
constitute the most si/nificant part of the current assets of a lar/e majority of companies in %ndia.
"aw materials, /oods in process and finished /oods all represent arious forms of inentory.
!ach type represents money tied up until the inentory leaes the company as purchased
products. Because of the lar/e si:e of the inentories maintained by firms, a considerable amount
of funds is reuired to be committed to them. %t is therefore absolutely imperatie to mana/e
inentories efficiently and effectiely in order to aoid unnecessary inestments. #ne of the most
critical and time-consumin/ aspects of manufacturin/ is mana/in/ the tass of maintainin/
sufficient amounts of materials on hand at all times. #ne of the main areas of the project is the
analysis part where the data obtained from the e3istin/ study is been utili:ed. $or the analysis
part, AB4 analysis was carried out. he norms were fi3ed for each of the inentory part taen
into account for the project. here by the inentory to be ept for the production of each model
was also arried at.
2.17 A REPORT ON INVENTORY MANAGEMENT #Y VIJAYARAMAN
%n this reiew Mr. 2%DA@A"AMA& .", who as done the project about A report %nentory
at 6#%7, an %nentory Mana/ement System is an essential element in an or/ani:ation. %t is
comprised of a series of processes which proide an assessment of the or/ani:ation
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and their norms for different classification of 6ashers at 6#%7. $inally he used correlation with
Statistical ools. 5e also classified !#U !+ +-= /0
6hen a manufacturin/ firm wors to /ain /reater control oer mana/ement of its
inentory, it helps to now what this means for a company. $or starters, ma3imi:in/ a
manufacturer 60
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#ne obious way to tae precautions for aoidin/ inentory shorta/e is by usin/ more
than one endor in particular areas of the supply chain.
A/9 0
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reach the manufacturin/ efficiency. Such thinin/, combined with today0 I/0 L0/0@!
%n this part, it proides a brief description for how optimal inentory leels for materials
are ept. !ssentially, this section can sere as a startin/ point for inentory mana/ers. he $irst
thin/ he determines the ideal inentory leels is a materialPs !conomic #rder ?uantity 8!#?9.
his is the amount one should be orderin/ when you place orders.
&e3t he determines Safety Stoc 8SS9. his is the amount that you should hae remainin/
when the !#? arries. his should be intuitie because safety is what you hae when your
shipment arries and when the order arries 8!#?9 it /ets added to the safety stoc.
%t is clear that aera/e minimum and ma3imum leel because you mi/ht not receie the
!#? e3actly when you planned to and therefore may hae more or less. #n aera/e you should
hae the SS amount when you receie shipments. Between these two aera/e minimum and
ma3imum alues lies your lon/-term aera/e inentory.
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P+ II: H5 A!!0!! *0/+@=+0 I/0 L0/0@!
Aera/e %nentory can be calculated by Simplistic Method.
Most methods of accountin/ tae the be/innin/ inentory of a period, add it to the endin/inentory of a period, and diide by ). his essentially proides the mathematical aera/e for a
/ien month.
A/>. I/0 *#0>> I/0K *#0>> I/0 K U! P9=
A/>. I/0 *#0>> I/0 K E9> I/02
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CHAPTER)III
O#JECTIVES OF THE STUDY
PRIMARY O#JECTIVE
• o analyse the efficiency of %nentory Mana/ement of 6hirlpool of %ndia 7td.
SECONDARY O#JECTIVE
• o identify optimum leel of inentory which minimi:es the cost.
• o identify the safety stoc leel for arious components.
• o classify the arious components based on its alue and moements.
• o identify inentory reuirement of the company for the ne3t year.
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CHAPTER)IV
RESEARCH METHODOLOGY
4.1 RESEARCH
"esearch is a process in which the researcher wish to find out the end result for a /ien
problem and thus the solution helps in future course of action. he research has been defined as
IA careful inesti/ation or enuiry especially throu/h search for new facts in branch of
nowled/eJ
4.2 RESEARCH DESIGN
he research desi/n used in this project is Analytical in nature the procedure usin/, which
researcher has to use facts or information already aailable, and analy:e these to mae a critical
ealuation of the performance.
4.3 DATA COLLECTION
P+ S=
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. he data are collected from the annual reports maintained by the company for the past si3
years i:., )**)-)**+
). 'ata are collected from the company
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CHAPTER)V
DATA ANALYSIS AND INTERPRETATION
.1 ECONOMIC ORDER UANTITY *EO
MEANING
!conomic #rder ?uantity is the %nentory mana/ement techniue for determinin/
optimum order uantity which is the one that minimises the total of its order and carryin/ costs.
TA#LE .1.1 ECONOMIC ORDER UANTITY
S@. N.C?0! D0+9
P0 0+
R0)O90
C!90
C+>
C!=0+
EO
N. ;
=!
O9009
N. ;
90
?0 0+
1.Bearing - Ball Sealed –6006 3,60,000 12,200 2 66,272.17 30,000 5.43
2.Bearing - Ball Sealed -6205 - Swift 48,000 6,200 2 17,251.09 4,000 2.78
3.Drive assl - !B" - #$ina%&gitat'r( - 2 )in drive 1,44,000 1,700 36 3,687.82 12,000 39.05
4.Drive assl - *#" Dl+ -!B" - #$ina %)eller( 96,000 1,700 36 3,011.09 8,000 31.88
5.Driven /lle - !B" -#$ina %Sae )/lle( 2,40,000 1,700 36 4,760.95 20,000 50.41
6.as$ tier - *' Dl+%!ing'( - it$ /er%S60( 30,000 1,700 2 7,141.43 2,500 4.20
7.as$ tier - *' Dl+%!ing'( - it$'/t /er %S 60( 42,000 1,700 2 8,449.85 3,500 4.97
8. eater %( 21,600 4,700 2 10,075.71 1,800 2.14
9. eater %#$andini( 9,600 6,200 2 7,714.92 800 1.24
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10. ig tail 'nnet'r-3.0 3,60,000 6,200 2 47,244.05 30,000 7.62
11. ig tail 'nnet'r-3.8 1,80,000 6,200 2 33,406.59 15,000 5.39
12. Seal drive t/e - Swift 42,000 6,200 2 16,136.91 3,500 2.60
13. Seal t/ s/))'rt - Swift 42,000 6,200 2 16,136.91 3,500 2.60
14. 't'r - elling 90,000 6,200 18 7,874.01 7,500 11.43
15. S)las$ 't'r 42,000 6,200 18 5,378.97 3,500 7.81
16. 't'r - ea' 3,00,000 65,200 18 46,619.02 25,000 6.44
17. #la) t/ 66,600 10,100 2 25,935.69 5,550 2.57
18.S/s)ensi'n S)ring &ssl 70 %ist/d( 7,200 10,000 2 8,485.28 600 0.85
19. D''r ': - ig$ *nd 1,800 15,400 2 5,264.98 150 0.34
20.D''r ':, 'w *nd,70 1,800 15,400 2 5,264.98 150 0.34
21. Ball Bearing-"/ter, 70 3,600 8,400 2 5,499.09 300 0.65
22. Ball Bearing-nner, 70 3,600 8,400 2 5,499.09 300 0.65
23.eating *leent ,ig$;id *nd,70 1,800 8,400 2 3,888.44 150 0.46
24. eater 'w end 1,800 8,400 2 3,888.44 150 0.46
25. ress'stat, 70 3,600 8,400 2 5,499.09 300 0.65
26. ier 2-*#6018- 1,800 8,900 2 4,002.50 150 0.45
27.ater Distri/ti'n
&t/at'r, 70 1,800 7,900 2 3,770.94 150 0.48
28. !/t /s$ n, 70 21,600 16,400 2 18,821.26 1,800 1.15
29. eater #li),70 3,600 7,750 2 5,282.05 300 0.68
30. Bell'w, 70 3,600 84,300 2 17,420.68 300 0.21
31.S$': &s'rer &ss,70 7,200 9,800 2 8,400.00 600 0.86
32.lass,70 3,600 23,100 18 3,039.74 300 1.18
35. Drain /), 1,800 20,100 2 6,014.98 150 0.30
"n ; "ff Swit$ 'w end 1,800 7,700 2 3,722.90 150 0.48
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36. %/s$ /tt'n swit$(
37.$er'stat ?ariale, 'w*nd, 70 1,800 8,500 2 3,911.52 150 0.46
38. 'l ? Belt,70 1,800 1,700 2 1,749.29 150 1.03
39. / Sealing, 70 3,600 1,700 2 2,473.86 300 1.46
40. SS #'il 2,40,000 52,200 18 37,309.52 20,000 6.43
ANALYSIS INTERPRETATION :
%n the aboe table the !#? = the no. of orders purchased per year for arious
components are calculated. he calculated !#? is compared with the no. of units of each
component purchased in the or/ani:ation. %t is found that, there is a ariation in the !#? = no. of
unit purchased. %t is understood that the company is not followin/ !#? for purchasin/ the
materials = therefore the inentory mana/ement is not satisfactory.
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.2 SAFETY STOC"
MEANING
Safety stocs are the minimum additional inentory which sere as a safety mar/in to
meet an unanticipated increase in usa/e resultin/ from an unusually hi/h demand and an
uncontrollable late receipt of incomin/ inentory.
T+-@0 .2.1 S+;0 !
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2. Bearing - Ball Sealed - 6205 – Swift 0.27 0.166 48,000 4,992
3. Drive assl - !B" - #$ina %&gitat'r( - 2 )in drive 0.27 0.166 1,44,000 14,976
4. Drive assl - *#" Dl+ - !B" - #$ina %)eller( 0.27 0.166 96,000 9,984
5. Driven /lle - !B" - #$ina %Sae )/lle( 0.27 0.166 2,40,000 24,960
6. as$ tier - *' Dl+ %!ing'( - it$ /er %S60( 0.27 0.166 30,000 3,120
7.as$ tier - *' Dl+ %!ing'( - it$'/t /er%S 60( 0.27 0.166 42,000 4,368
8. eater %( 0.27 0.166 21,600 2,246.4
9. eater %#$andini( 0.27 0.166 9,600 998.4
10. ig tail 'nnet'r-3.0 0.27 0.166 3,60,000 37,440
11. ig tail 'nnet'r-3.8 0.27 0.166 1,80,000 18,720
12. Seal drive t/e – Swift 0.27 0.166 42,000 4,368
13. Seal t/ s/))'rt – Swift 0.27 0.166 42,000 4,368
14. 't'r – elling 0.27 0.166 90,000 9,360
15. S)las$ 't'r 0.27 0.166 42,000 4,368
16. 't'r - ea' 0.27 0.166 3,00,000 31,200
17. #la) t/ 0.27 0.166 66,600 6,926.4
18. S/s)ensi'n S)ring &ssl 70 %ist/d( 0.27 0.166 7,200 748.8
19. D''r ': - ig$ *nd 0.27 0.166 1,800 187.2
20. D''r ':, 'w *nd, 70 0.27 0.166 1,800 187.2
21. Ball Bearing-"/ter, 70 0.27 0.166 3,600 374.4
22. Ball Bearing-nner, 70 0.27 0.166 3,600 374.4
23. eating *leent , ig$;id *nd,70 0.27 0.166 1,800 187.2
24. eater 'w end 0.27 0.166 1,800 187.2
25. ress'stat, 70 0.27 0.166 3,600 374.4
26. ier 2-*#6018- 0.27 0.166 1,800 187.2
27. ater Distri/ti'n &t/at'r, 70 0.27 0.166 1,800 187.2
!/t /s$ n, 70 0.27 0.166 21,600 2,246.4
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28.
29. eater #li),70 0.27 0.166 3,600 374.4
30. Bell'w, 70 0.27 0.166 3,600 374.4
31. S$': &s'rer &ss, 70 0.27 0.166 7,200 748.8
32. lass,70 0.27 0.166 3,600 374.4
35. Drain /), 0.27 0.166 1,800 187.2
36. "n ; "ff Swit$ 'w end %/s$ /tt'n swit$( 0.27 0.166 1,800 187.2
37. $er'stat ?ariale, 'w *nd, 70 0.27 0.166 1,800 187.2
38. 'l ? Belt,70 0.27 0.166 1,800 187.2
39. / Sealing, 70 0.27 0.166 3,600 374.4
40. SS #'il 0.27 0.166 2,40,000 24,960
ANALYSIS INTERPRETATION :
%n the aboe table, safety stoc for the arious components calculated are shown. Actual
demand is /ien for each component for a period of year and the lead-time is calculated at a
ma3imum of ** days = normal of C* days and these were conerted into per annum. So, from
calculation of safety stoc, we can able to determine how much the company can hold the
inentory in resere stoc per annum.
.3 A#C ANALYSIS
MEANING
he AB4 system is a widely used classification techniue to identify arious items of
inentory for purposes of inentory control. #n the basis of unit cost inoled, the arious items
are classified into E cate/ories>
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89 A, consistin/ of items with the lar/e inestment,
8)9 4, with relatiely small inestments but fairly lar/e number of items and
8E9 B, which stands mid-way between cate/ory A = 4.
4ate/ory A needs the most ri/orous control, 4 reuires minimum attention and B deseres less
attention than A but more than 4.
A C@+!! *H>6 V+@=0
'rie assly - &B# - 4hina 8A/itator9 - ) pin drie
'rie assly - !4# 'l3 - &B# - 4hina 8%mpeller9
6ash timer - !co 'l3 8&in/bo9 - 6ith bu::er 8SC*9
5eater 8669
5eater 84handini9
66 Motor - 6ellin/
Splash Motor
Motor - Deamo
5eatin/ !lement, 5i/h;Mid !nd,$7+*
5eater 7ow end
imer )-!4C*1-$7
6ater 'istribution Actuator, $7+*
Bellow, $7+*
hermostat 2ariable, 7ow !nd, $7+*
Uniersal Motor Assy, Mid = 5i/h !nd,$7+*
Motor 7ow end
6indow Glass,$7+*
'rain (ump, $7
# C@+!! *M90+0 V+@=0
Bearin/ - Ball Sealed - C**C
Bearin/ - Ball Sealed - C)* - Swift
6ash timer - !co 'l3 8&in/bo9 - 6ithout bu::er 8S% C*9
'oor 7oc - 5i/h !nd
'oor 7oc, 7ow !nd, $7+*
Ball Bearin/-#uter, $7+*
Ball Bearin/-%nner, $7+*
Seal drie tube - Swift
Seal tub support - Swift
(ressostat, $7+*
Shoc Absorber Assy, $7+*
#n ; #ff Switch 7ow end 8(ush button switch9
SS 4oil
(oly 2 Belt,$7+*
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T+-@0 .3.1 A#C ANALYSIS
C+0>0! T+@ N. I0! C@+!!0! P00
A 1 F
B F E
4 1 )*
C C@+!! *L5 V+@=0
'rien (ulley - &B# - 4hina 8Same pulley9
(i/ tail connector-E.*
(i/ tail connector-E.1
4lamp tub
Suspension Sprin/ Assly $7 +* 8$imstud9
&ut (ush %n, $7+*
5eater 4lip,$7+*
ub Sealin/, $7+*
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T+@ 4 1
ANALYSIS INTERPRETATION :
he aboe table shows the classification of arious components as A, B = 4 classes usin/
AB4 analysis techniues based on unit alue. $rom the classification A classes are those whose
unit alue is more than "s.** and constitutes F of total components. B classes are those
whose unit alue is between "s.)-** constitutes E of total components and 4 classes are
those whose unit alue is less than "s.) constitutes E* of total components. %t is /ood that the
company maintains its inentories based on its alue usin/ controllin/ techniues.
C6+ .3.1 A#C A+@!!
45
35
20
0
5
10
15
20
25
30
35
40
45
50
& B #
.4 FSN ANALYSIS
MEANING
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All the items in the inentory are not reuired at the same freuency. Some are reuired
re/ularly, some occasionally and some ery rarely.
$S& classifies items into $ast moin/, Slow moin/ and &on-moin/.
FAST MOVING ITEMS
Bearin/ - Ball Sealed - C**C
Bearin/ - Ball Sealed - C)* - Swift'rie assly - &B# - 4hina 8 A/itator 9 - ) pin drie
'rie assly - !4# 'l3 - &B# - 4hina 8 %mpeller 9
'rien (ulley - &B# - 4hina 8 Same pulley 9
6ash timer - !co 'l3 8 &in/bo 9 - 6ith bu::er 8 SC* 9
6ash timer - !co 'l3 8 &in/bo 9 - 6ithout bu::er 8 S% C* 9
5eater 8 66 9
5eater 8 4handini 9
(i/ tail connector-E.*
(i/ tail connector-E.1
Seal drie tube - Swift
Seal tub support - Swift
66 Motor - 6ellin/
Splash Motor
Motor - Deamo
SS 4oil
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T+-@0 .4.1 FSN ANALYSIS
SLOW MOVING ITEMS
4lamp tubSuspension Sprin/ Assly $7 +* 8 $imstud9
'oor 7oc - 5i/h !nd
'oor 7oc, 7ow !nd, $7+*
Ball Bearin/-#uter, $7+*
Ball Bearin/-%nner, $7+*
5eatin/ !lement , 5i/h;Mid !nd,$7+*
5eater 7ow end
(ressostat, $7+*
imer )-!4C*1-$7
6ater 'istribution Actuator, $7+*
&ut (ush %n, $7+*
5eater 4lip,$7+*
Bellow, $7+*
Shoc Absorber Assy, $7+*
Uniersal Motor Assy, Mid = 5i/h !nd,$7+*
Motor 7ow end
6indow Glass,$7+*
'rain (ump, $7
#n ; #ff Switch 7ow end 8 (ush button switch 9
hermostat 2ariable, 7ow !nd, $7+*
(oly 2 Belt,$7+*
ub Sealin/, $7+*)E +
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C+0>0! T+@ N. 0! C@+!!0! P00
$ + FE
S )E +
& * *
T+@ 4 1
ANALYSIS INTERPRETATION :
%n the aboe table shows the classification of arious components as $S& items usin/
$S& analysis techniues based on moements. $rom the classification $ items are those whichmoes fastly and constitutes FE of total components. S items are those which moes slowly
constitutes + of total components and & items are those which doesn
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. TREND ANALYSIS
MEANING
"e/ression means dependence and inoles estimatin/ the alues of a dependent ariable
@, from an independent ariable R.
@ a b3
6here a y 0 b 3L b V 3y 0 n 3 y
V3)- n3 )
T+-@0 ..1 CALCULATION OF INVENTORY TREND
YEAR
*
I/00!
*R!.
Y
(
()2
(2 (Y
*R!
)**E ,+,11,F -) F-1,E,++,*)1
)**F 1,CC,C1,E** - -1,CC,C1,E**
)** )*,E+,1,* * * *
)**C +,1,C,)E +,1,C,)E
)**+ +,)),1),*F ) F EF,F,CF,*)1
#A78V9 73,3,8,1 1 2,1,7,13
3 V3;n *; *
y Vy;n +E,*E,1,; F,C*,++,1.)
b V 3y 0 n 3 y ),*,+,E- T * T +E,*E,1, ),*,+,.E *-T*
V3)- n3 )
a y 0 b 3 F,C*,++,1.) 0 ),*,+,.E T * F,C*,++,1.)
y a b3
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F,C*,++,1.) ),*,+,.E 3
he forecast of inentory for the year )**1 is computed by substitutin/ 3 )**1 in the aboe
euation.
F,C*,++,1.) ),*,+,.E 3
F,C*,++,1.) ),*,+,.E 83-)**9
F,C*,++,1.) ),*,+,.E 8)**1-)**9
F,C*,++,1.) ),*,+,.E 8E9
F,C*,++,1.) +,*,E,+E.
)),,E,*).
herefore inentory for the year )**1 will be appro3imately "s.)),,E,**
T+-@0 ..2 INVENTORIES PERCENTAGE
Y0+! I/00! P00
)**E ,+,11,F .C
)**F 1,CC,C1,E** .
)** )*,E+,1,* ).F*
)**C +,1,C,)E 1.*
)**+ +,)),1),*F 1.*
)**1 )),,E,** )E.)*
TOTAL ,1,1B,B1 1
ANALYSIS INTERPRETATION :
%n the aboe table shows the percenta/e of inentories increases from .C to 1.* in the
year )**E-)**+. the inentory for the year )**1 is e3pected to be )E.)* which is a/ain in the
increasin/ trend. his infers that the inentory reuirement is increasin/ in the future period also.
%t shows satisfactory position of inentories as it implies increasin/ production = demand for the
product.
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C6+ ..2 TREND OF INVENTORY
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008
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.B INVENTORIES TURNOVER RATIO
MEANING
his ratio is calculated to consider the adeuacy of the uantum of capital and its
justification for inestin/ in inentory. A firm must hae reasonable stoc in comparison to sales.
%t is the ratio of net sales and the aera/e inentory. his ratio helps the financial mana/er to
ealuate inentory policy. his ratio reeals the number of times finished stoc is turned oer
durin/ a /ien a accountin/ period.
T60 ;=@+ ; 60 + ! N0 !+@0!
A/>. I/0
T+-@0 .B.1 I/00! T=/0 R+ V0@. I/0
*R!.
R+ V0@ )*
)**F C,*C,FE,CC 1,),)1,F*+ .1*> )*E
)** ,+E,E*,1 F,),)C,) *.1*> FC)**C ,E,+F,+ 1,1,)E,E1 ).)> )
)**+ +,,+1,))* +,F*,+,CE F.> 1
ANALYSIS INTERPRETATION :
%n the aboe table shows inentory turnoer ratio for the past years. he ratio is showin/
increasin/ trend from.FC to F. in the year )**E to )**+, e3cept in the year )** which shows
only *.1* times.6hereas in the elocity of inentories shows less in )**+ as compared to )**E which is
1 days in )**+ and )* days in )**E e3cept in the year )** which is FC days. his shows that
the inentories are easily conerted into sales within the shortest period i.e. the company was able
to sell "s. F. by inestin/ rupee one in the stoc in )**+.
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CHAPTER)VI
B.1 FINDINGS OF THE STUDY
%t is found that, there is a ariation in the !#? = no. of unit purchased. %t is understood
that the company is not followin/ !#? for purchasin/ the materials. So, the inentory
mana/ement is not satisfactory.
$rom calculation of safety stoc, we can able to determine how much the company can
hold the inentory in resere stoc per annum.
$rom the classification A classes are those whose unit alue is more than "s.** and
constitutes F of total components. B classes are those whose unit alue is between
"s.)-** constitutes E of total components and 4 classes are those whose unit alue
is less than "s.) constitutes E* of total components. %t is /ood that the company
maintains its inentories based on its alue usin/ controllin/ techniues.
$rom the classification $ items are those which moes fastly and constitutes FE of total
components. S items are those which moes slowly constitutes + of total components
and & items are those which doesn
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he ratio is showin/ increasin/ trend from.FC to F. in the year )**E to )**+, e3cept in
the year )** which shows only *.1* times. 6hereas in the elocity of inentories shows
less in )**+ as compared to )**E which is 1 days in )**+ and )* days in )**E e3cept
in the year )** which is FC days. his shows that the inentories are easily conerted
into sales within the shortest period i.e. the company was able to sell "s. F. by inestin/
rupee one in the stoc in )**+.
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B.2 SUGGESTIONS AND RECOMMENDATIONS
Accordin/ to !#?, as the company does not follow !#? for its purchasin/, the company
can be adjusted to order materials. his will reduce the cost = help to enhance the profit
of the company.
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he company is reuired to maintain safety stoc for its components in order to aoid
stoc-out conditions = help in continuous production flow.
Under AB4 analysis, the mana/ement must hae more control on A than B=4, because A
class constitutes more8F9 of hi/her alues. here should be ti/ht control e3ercised on
stoc leels, to aoid deterioration. his is done throu/h maintainin/ low safety stoc,
continuous chec on schedules = ordered freuently in inentories, in order to aoid oer
inestment of worin/ capital.
he company must not /o to the &on-moin/ items as far as possible, because there will
be unnecessary blocin/ of worin/ capital. his would hinder the other actiities of the
or/ani:ation.
he past data shows increase in inentory the company is also e3pectin/ more inentories
for future period i.e. )**1. he mana/ement is reuired to maintain the same inentory
trend in the forth comin/ year also.
he inentory turnoer ratio indicates whether inestment in inentory is within proper
limit or not. %t also measures how uicly inentory is sold. %t reuires to maintain a hi/h
turnoer ratio than lower ratio. A hi/h ratio implies that /ood inentory mana/ement and
it also reflects efficient business actiities.
CHAPTER)VII
CONCLUSION
A better inentory mana/ement will surely be helpful in solin/ the problems the
company is facin/ with respect to inentory and will pae way for reducin/ the hu/e inestment
or blocin/ of money in inentory. $rom the analysis we can conclude that the 4ompany can
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follow the !conomic #rder ?uantity 8!#?9 for optimum purchase and it can maintain safety
stoc for its components in order to aoid stoc-out conditions = help in continuous production
flow. his would reduce the cost and enhance the profit. Also there should be ti/ht control
e3ercised on stoc leels based on AB4 analysis = maintain hi/h percenta/e in fast moin/
items in inentories as per on $S& analysis for efficient runnin/ of the inentory. Since the
inentory urnoer ratio shows the increasin/ trend, there will be more demand for the products
in the future periods. %f they could properly implement and follow the norms and techniues of
inentory mana/ement, they can enhance the profit with minimum cost.
CHAPTER)VIII
8.1 LIMITATIONS OF THE STUDY
• he entire analysis applies only to 6hirlpool %ndia 7td, (uducherry.
• he study taes into account only the uantitatie data and the ualitatie aspects were not
taen into account.
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• he assumption made in the !#? and Safety stoc formulas restrict the use of the formula. %n
practice, unit cost, lead time, reuirements of inentory items are not accurately predictable.
"ate of consumption aries in many cases. As such application of the formula often becomes
a difficult and complicated matter.
• AB4 analysis is not one time e3ercise and items are to be reiewed and recate/orised
periodically.
8.2 SCOPE FOR THE FURTHER STUDY
• o /ie plan to the company what to order, when to order and how much to order.
• %t is useful for decidin/ operatin/ policy = olume of inentory.
• %t helps to deelop the policies for the e3ecuties in inentory.
• %t helps the company what items /oods are cate/ori:ed.
• (roject helps to deal with forecastin/ in inentory.
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#I#LIOGRAPHY
REFERENCES #OO"S
M @ Hhan ( H Dain I$inancial Mana/ementJ Fth edition ata McGraw 5ill.
".S.&. (illai 2. Ba/aathi IMana/ement Accountin/J S 4hand = 4o.
Martand elsan/ I%ndustrial !n/ineerin/ = (roduction Mana/ementJ S 4hand = 4o.
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". (aneerselam I#perations "esearchJ (rentice hall #f %ndia (riate 7td.
B.M. 7all &i/am %.4. Dain I4ost Accountin/J (rentice hall #f %ndia (riate 7td.
S.(. %yen/ar I4ost = Mana/ement Accountin/J Sultan 4hand = Sons.
WE# SITES
www.whirlpoolindia.com
www.inentorymana/ementreiew.or/;)**;*C;safetyWstoc
www.inentorymana/ementreiew.or/;inentoryWbasics;inde3
www.inentorymana/ementreiew.or/;justintime;inde3
www.inentorymana/ementreiew.or/;inentoryWcontrol;inde3
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