Escolar Documentos
Profissional Documentos
Cultura Documentos
CHAPTER 1
INTRODUCTION
consumption of the item. This project is also to know the movement level of item in
organization.
customers.
decisions or manage operations; they provide the information to firm who make more
The emphases on each area will vary depending on the company and how it
operates, and what requirements are placed on it due to market demands. Each of the
areas above will need to be addressed in some form or another to have a successful
management. The effective use of all manpower is looked after by the personnel
management. Similarly for the balanced growth and efficient running of enterprise, it is
2
necessary that material cost, material supply and materials utilization are so controlled
number of capital being locked up for a longer period and improving capital turnover
ratio.
not minimize the importance of material management. It in fact lies in effective savings
in the materials expenditure. Even a small change in the materials cost can lead to a
substantial saving or avert a heavy loss or push the enterprise towards a heavy loss or
Through this project the management in Titan precision engineering can use
various controls.
2. Tickler control enables the manager to physically control a small portion of the
3. Click sheet control enables the manager to record the item as it is used on a
sheet of paper.
3
4. Stub control (used by retailers) enables the manager to retain a portion of the
By doing so, we can effectively and efficiently manage the inventories to execute
1.2INDUSTRYPROFILE
futuristic that made people awestruck. A wireless operated car without a driver. It was a
real full size car, a Morris Minor 1954 model with registration number 4216. In
1957, when the electronics of today was not available, he had to depend totally on
available material. The wireless transmitter was a spark plug, the receiver was a radio
set and the entire actuation systems were built using the mechano set (the build it
yourself toy!) The University of Madras awarded a gold medal for his unique
achievement.
Venky Engineering Works was started for full fledged engineering research and
development work.The first product of the company, the Venky Moped is produced. The
engine, transmission and electronic ignition was indigenously developed. The moped
was powered by a 44cc 2 stroke engine developing around 3.5HP. The moped had a
maximum speed of 60 Kmph. The fuel efficiency of 56 Km/l. The company owes
The first test rig is made. An engine inlet and exhaust valve spring test rig is made
and delivered.The treadmill was the bread and butter product of the company. It was
used for medical as well asathlete training. Used from Indian Defence to all leading
medical institutions
The heart lung machine made open heart surgeries affordable with this piece of
5
Indian technology. This machine acts as the lung and heart of the patient undergoing
The fist electronically controlled test rig is made. A friction measuring device called
the scale friction test rig, used to evaluate the frictional properties of automotive brake
The first micro controller based test rig is made. A friction measuring device called the
scale friction test rig, used to evaluate the frictional properties of automotive brake and
Venky Engineering works is divided among the partners and the testing machine /
controlled test rig is made. Again a friction testing machine called friction coefficient test
rig. The flagship product of Pyramid Precision Engineering. It has sold over 40
The biggest machine made in Pyramid Precision Engineering, the Railway brake
dynamometer is delivered. The machine simulates the inertia of a railway wagon on the
(India) Pvt. Ltd.Independent IT division created. This division will provide software and
specialist activity to undertake precision machine tool design and development. A mixed
business platform was created including both research and commercial work, bridging
Professor Pat McKeown, OBE with senior colleagues identified “The Eleven
Principles and Techniques for the Design of High Precision Machines” under which
many world leading ultra precision machines and systems are still being produced
today.
In 1987 Cranfield Precision Engineering Ltd (CPE) was formed out of CUPE to
continue the design, development and manufacture of high precision machines and
world's first high production rate CNC profile grinder, now manufactured in series
the CUPE Electronic Gear-box principle under high speed computer control.
Early 1987, when Indian consumers rated Titan ahead of all other brands as the Most
Admired Brand in India across all product categories (the first ever such survey done by
Brand Equity), it did not surprise people that a 13 year-old had managed to upstage
many older and more well-known brands: it was expected of Titan to achieve such
It was also a fitting tribute to a brand, which had not only revolutionized the Indian
Precision industry, but also brought in world-class benchmarks in product design, quality
The industry was dominated by the public sector which had brought in watch
manufacturing into India, enjoyed tremendous goodwill in the market, but had not really
7
invested in evolving itself and its consumers: styling still remained basic, choice was
limited.
The watch shops were narrow, dingy and typically located in the older, traditional
markets of the city. You went there only to buy a watch, never to browse, never to
simply check out. Visual merchandising was very much at the stage of "decoration" if
any, and neither the brands nor the retailers saw it as important. The companies
themselves did not have much contact with retailers, preferring to sell through
wholesalers, doing well that way. There was hardly any need for consumer contact or
All this affected the consumers. Watches remained a time-keeping device, so one watch
was enough, thank you. Since the quality of the watch was quite good, it lasted quite a
while, and the consumers did not change it for 10, 15, 20 years. And when they did
change it, they did not pay a high price for the new piece because, what the hell, they
Xerxes Desai's vision was to dramatically alter this perception of consumers, and make
Titan a fashion accessory. He knew that that was the only way that this new brand
would explode the market and wrest control from the dominant HMT. So he and his
Mechanical technology was the norm - Quartz had not really taken off in India. Titan
would go against that and build its line based on quartz. Accuracy would become a
selling-plank.
Styling was basic - This was a constraint imposed by the technology as well the outlook
Choice was limited - You had 200 models to pick from, that was it. Titan decided to
inundate consumers with a wide choice in style, functions and price. The initial range
Shops were dark, dingy and uninteresting - There was no importance given to
presentation, and therefore no attempt made at it. Titan brought in the concept of
retailing into the watch market, established a network of fine showrooms which would
later become the world's largest network of exclusive watch stores. These stores not
only helped Titan to gain leadership substantially, but also irrevocably altered the retail
landscape of the watch market through a demonstration effect on the traditional dealers.
Advertising was expenditure - Titan saw this as a vital investment. Right from Day 1,
Titan invested significantly in advertising and in that process created a set of memorable
So Titan, backed by world-class quality created at a world-class plant located just off
Bangalore, backed by the Tata name, was launched into the Indian market on the back
of these new rules. It created waves right in the early days, mesmerised consumers,
Today, in early 21st century India, it is taken for granted that a watch is a fashion
accessory. Titan dominates the market, with a 60% share of the organised sector
market (the total market, including the unorganised sector, is estimated at around 42
million units). Titan's quality record is impressive, its sales and service network is wide
and deep, and its network of exclusive showrooms, The World of Titan, is one of the
most prestigious and visible retail brands in the country, offering world-class levels of
What is truly amazing about Titan is the sheer scale of its offering and the consequent
choice it offers to multiple segments across taste, age and economic background. Titan
saw this approach as the foundation of its leadership strategy in the early days. Even
the early range had distinct offerings for different requirements: formal watches (gold
plated cases with fine leather straps) for the executive, dress watches (gold plated
cases with ornamental gold plated bracelets) for those with a preference for jewellery,
rugged watches (all steel watches with a skew to functionality) for those whose usage
TITAN PROFILE
Back in the early eighties, the Tata Group had identified the watch category as a
potential consumer market for the Tatas to enter. Xerxes Desai, a Tata veteran and the
then MD of Tata Press, was chosen to lead that venture. In those days of pre-
liberalization the watch market, like most consumer markets in India, was way behind
the rest of the world. The technology in vogue was the reliable, but outdated
"Mechanical" technology, which used the unwinding of a mechanical spring to tell time.
Not only was the accuracy of time-keeping not good enough, but the bulky mechanical
The industry was dominated by the public sector which had brought in watch
manufacturing into India, enjoyed tremendous goodwill in the market, but had not really
invested in evolving itself and its consumers: styling still remained basic, choice was
limited.
The watch shops were narrow, dingy and typically located in the older,
traditional markets of the city. You went there only to buy a watch, never to browse,
never to simply check out. Visual merchandising was very much at the stage of
"decoration" if any, and neither the brands nor the retailers saw it as important. The
components for the aerospace industry and dashboard clocks for the automobile
industry. In addition, there is also a team that is involved in machine building and
automation. The Division has successfully executed a robotized automation project for a
auto major in Europe.The Company’s Research and Development has made significant
B2B enterprise, witnessed good growth during the year.PED manufactures and markets
long-term contracts and agreements with reputed global customers in the areas
ofaerospace, automotive and hi-tech sectors such as oil exploration and production.
Specific capabilities required for thesesectors have been added, and the quality systems
put in place have earned accolades from current and potential customers.The Division
has achieved certification for stringent quality management such as AS 9100B for
aerospace segment, TS 16949 for automotive segment, ISO 14000 for environmental
management, etc. The division has also achieved the highest possible
12
supplier recognition from Ford – the coveted Ford Q1 status.The machine building and
product range has now moved up the value chain from being suppliers ofstand-alone
Division (PED), continued to witness growth this year, serving global automotive,
momentum on the growth path with a revenue of Rs. 56 crores, having a growth of 46%.
The aerospace unit, during the year, focused on product mix rationalisation to
improve the value addition and also set a program to move up the value chain from
making mere components to critical sub-assembly parts. The Division has become a
member of choice for the Tata Consortium formed to provide integrated solutions for
AS 9100 B for the Aerospace segment with a score of 98%, one of the highest in the
industry circle.
13
CHAPTER – 2
It affects not only a particular industry but the entire economic activity of a whole
nation.
The materials form the largest single expenditure item in the most of the
manufacturing organization form the inventories usually represent 60%-70% of the total
Every organization has its success in the aspects of financial outcomes. The
entire production activity is being carried out with the help of the inventory. It is
essential to estimates the details of stocks and spares in the forthcoming periods of
inventory every year in very organization in order to realize the actual profit or
Engineering considered by the researcher to the inventory control system and its
3. To find out the value of the consumption of the each item by using ABC analysis.
correlation between the receipts and issues of items, the purpose and usage of these
This study helps to control the demand and supply in future. Through this the
company can manage the important items in excess amount and it will be result in
demand control. It helps in increasing in cash flow by keeping a track of sales over
the year.
In future the company can manage and control the inventory items to make high
profits. The main aim of the study is to control the inventory management system of the
firm by implementing the control methods of inventory and the suggestions that are
given for the moderate level of inventory turnover ratio will maximize the profit in future.
number of capital being locked up for a longer period and improving capital turnover
ratio.
16
Every project has its own limitations and some of those encountered
departments.
3. The data collected for computation has been in quantitative terms rather than
INTRODUCTION
suggested solution; collecting, organizing and evaluating data; making deductions and
reaching conclusions; and at last carefully testing the conclusion to determine whether
RESEARCH DESIGN
existing facts and figures regarding financial position of the company, the research
DATA DESIGN
For the purpose of the study the data has collected is purely secondary in
1. Ratio analysis
2. ABC analysis
3. XYZ analysis
4. FSN analysis
5. EOQ analysis
18
1.RATIO ANALYSIS
Ratio analysis is widely used tool of financial analysis. Ratios are relationships
expressed in mathematical terms between figures which are connected with each in
some manner.
so that the strengths and weaknesses of a firm as well as its historical performance and
Classification of ratios
The use of ratio analysis is not confined to financial managers only. There are
different parties interested in the ratio analysis for knowing the financial position of a firm
for different purposes. In view of different users of ratios, there are many types of ratios
which can be calculated from the information given in the financial statements. For the
particular purpose, the user determines the particular ratios that might be used for
financial analysis.
• Liquidity Ratios
• Leverage Ratios
• Profitability Ratios
• Activity Ratios
19
• Current Ratio
• Liquid Ratio
Leverage Ratios
• Debt-Equity Ratio
• Proprietary Ratio
• Solvency Ratio
Profitability Ratios
• Return On Equity
• Return on Investment
Activity Ratios
2. ABC ANALYSIS
when we want to control value of consumption of the item in rupees obviously when
we want to control value of the consumption of the material we must select those
review the consumption of overseas items up to date and accurate records should be
maintain for this items. The inventory of this item must be minimum and the orders
for these items should be staggered. So that timely arrival of these items is insured
attempt must be made to reduce internal and external lead-time of this items. Safety
stocks of these items should be minimum because frequency of ordering this items
are kept high, price discount for this items should not be avail because physical
B-item-this items should be kept under normal control and goods report
keeping must be maintain. Safety stock of these items can be moderate. Price
C-items-little control is required for c-items and the job of controlling should be
left lower level people such as those in charge of store. Large quantity or inventories
can be maintain these stock because they are cheap, so as to avoid stock out situation
these items should not kept under lock and key and must be kept at convenient places
21
open to all for uses safety. Stock of these items can be sufficient to avoid probability.
3. XYZ ANALYSIS
XYZ analysis must be carried out from any one of the following objectives or some of
level then authorization to draw materials from the stores will be given to high
level X item, low level for Z items and medium level for Y item.
item under lock and key, Z items keep open on the shop floor and under
4.FSN ANALYSIS
This classification takes into account the pattern of issues from stores. The three
letters stands for Fast – moving, Slow – moving and Non- moving. It is made on the
basis of how the material has moved during the earlier periods. The materials might
have been bought in large quantities a few years ago and would have become obsolete
The non – moving items can be listed and the list be sent to different
still desire storing of these materials in the stores. The items which have become
5.EOQ ANALYSIS
factors like cost of purchasing and receiving, normal consumption, interest on capital,
availability of storage accommodation, ordering and carrying costs. EOQ is the reorder
23
quantity, which is the quantity to be purchased each time an order is placed. It aims at
Let us consider the purchase of the material required for one year. If they
purchase and stock the entire quantity at a time, the inventory carrying cost will be high.
To avoid high inventory cost, they can purchase material in small quantities.
But in this case they have to place a number of purchase orders. This will
increase the ordering cost. So they have to find out an ordering quantity so that the total
inventory cost (inventory carrying cost + ordering cost) is minimum. This quantity is
Ordering Costs:
Here, the ordering cost also includes the costs of insurance incurred while the
goods are in transit. These costs are calculated on the basis of the past data and an
Carrying Costs:
In BHEL, Ranipet the carrying costs of materials includes the storage costs
alone. The insurance costs are not included in these because no insurance is being
paid on materials.
25
small. But inventories tend to become big without proper control. Materials and
inventories serve some social purpose in industries which stems from some economic
motives.
transaction and precaution. Typically speculative motive which affords ample scope for
holding large amount of inventories is not important for purpose of industrial activity.
The other two motives are more important here. The transaction motive results
from the desire to match inflow and outflow of materials under certain controlled
conditions. Precautionary motive arises out of the inability to predict future demands
precisely and getting the materials ready in time, without incurring some extra costs.
Thus, there also arises the need to maintain some safety or buffer stock in
order to maintain the smooth flow of materials without impairing production. But, as
more and more stocks of materials are held, this not only entails greater investment, but
On the other hand, if minimum inventory is held, with the increase in frequency
of buying the cost of ordering and processing increase. Also, the cost of stock-out poses
economic problem. Thus, inventory control is major MM function, which requires the
formulation, but further refinements are necessary as the situation dictates. Sometimes,
there are several costs associated with inventory, but there is always one in one
direction.
answered.
Determining these two basic questions – answers precisely requires cost – information,
and the solution lies in balancing opposite costs in order to find an optimal solution.
Not, all inventory problems however, demand that these questions be answered.
Sometimes, the inventory problem is so complex that it may not be possible to obtain all
solution which seeks to improve the existing condition without concern for the optimal
course of action.
optimal course of action. Thus, while inventory control is a major part of materials
activity, reducing inventory does not always ensure operational efficiency. This is where
Inventory control ensures that a working balance must be struck between them so
EVALUATION OF INVENTORY
agencies or internally. Within the organization itself, the top management, usually at the
end of the financial year and periodically during the year, evaluated the performance on
The user departments evaluate the materials function in terms of the number
and the duration of the stock-out. In a few Indian organizations, committees frequently
review the performance of materials management against the objectives set for the
department.
manager are: banks with regard to the credit- worthiness, and professional associations
and national association of materials management with respect to the ethical practices.
28
suggest improvements.
or service such as raw materials, component parts, assemblies and supplies. In the
manufacturing organizations, the important inputs are referred to as 5 Ms. Viz., Men
(Labour), Machines, Money, Materials and Methods. The relative importance among
these five Ms has shifted from time to time. In the beginning of industrialization the focus
was on machines, men (labour) and methods, but in recent years (from 1970 onwards)
production system since the cost of materials and cost on materials (cost incurred in
purchasing and storing the materials) put together account for 50 to 85%of the
production cost depending on the nature of the product and the type of the production
system.
MEANING OF INVENTORY:
Inventories are stock of materials of any kind stored for future use, mainly in the
finished goods awaiting use in the next process or finished goods awaiting release for
sale are also included in the broad category of inventories, which are nothing but idle
resources. Therefore, inventories are materials or resources of any kind having some
Apart from these, there are also many indirect materials, such as, maintenance
materials, fuels and lubricants, etc. Which are used in a manufacturing organization.
29
They are also classified as inventories of materials for future use. But they differ only in
their use and classification from raw and other direct materials. All of them earn nothing,
yet they are badly required to be stocked and to be used as and when the needs arise.
Definition:
organization to the point where, those materials are converted into the firm’s end
management function.
Phase 1. Planning: The basic planning elements are plans for capacity or
production levels and required inventory levels. Integral to these plans is the sales
forecast for the products. The detailed time sequenced plan called the schedule meets
Phase 2. Material Utilization: This is concerned with the efficiency of the flow of
Phase 3. Physical: This involves the physical storing, receiving, and issuing of
Phase 4. Control or Follow up: This includes the information feed back and
corrective action generated by the information monitoring the production rates, plant
TYPES OF INVENTORY:
There are many types of inventory, such as raw materials and production
goods inventories. All of them do not necessarily require the same treatment and,
therefore, policy with regard to each may also differ, according to their types and need in
Movement inventories
Lot-size inventories
Anticipation inventories
Fluctuation inventories
However, in general, their treatment follows from their needs and cost-benefit analysis.
These are raw materials and other supplies, parts and components which enter
into the product during the production process and generally from part of the product
IN-PROCESS INVENTORY:
MRO INVENTORIES:
Maintenance, repairs and operating supplies which are consumed during the
production process and generally do not form part of the product itself are referred to as
MRO inventories.
It arises because of the time necessary to move stocks from one place to
I=S*T
Where, S represents the average rate of sales and T, the transit time required to move
from one stage to another in a week, and I the movement inventory needed. As for
example, if it takes three weeks to move materials to a warehouse from the plant, and if
the warehouse sells 110 per week, then the average inventory is 110 units *3 weeks
time = 330. In fact, when a unit of finished stock is manufactured and ready for sale, it
must remain idle for three weeks for movement to the warehouse. Therefore, the plant
LOTSIZE INVENTORIES:
low, larger quantities are brought than are necessary for immediate need. It is a
32
common practice to buy some raw materials in large quantities in order to avail of
quantity discounts.
FLUCTUATION INVENTORIES:
maintained. But they are not absolutely essential in the sense that such stocks are
always uneconomical. Rather than taking what they can get, the general practice of
serving the customer well is the reason for holding such inventories.
ANTICIPATION INVENTORIES:
seasonal variations in the availability of some raw materials, it is convenient and also
and predictable.
of these basic types of inventories are carried into stock, less coordination and planning
required. Also less clerical, administrative and other efforts are needed and greater
difficulty is that gains are not directly proportional to the size of the inventories
maintained. As the size increases, even if they are efficiently maintained and properly
located, gains from additional stocks become less and less prominent. The cost of
quantities grow at an even faster rate than the inventories themselves. As such, the
basic problem is to strike a balance between the increase in costs and the decline in
33
situation is not easy, simply through intuition alone. Costs, and to be sure, the balancing
of opposite costs, lie at the heart of all inventory control problems, for which cost-
uses 10,000 to 50000 of different items which are carried in inventory. Initial planning
and subsequent control of such inventories can only be accomplished on the basis of
knowledge about them. Consequently, the starting point in inventory management and
and complete in all respects. All inventory items should be carefully described and a
available materials and services of right quality in the right quantity at the right time
(x)Disposal of scrap,
CHAPTER: 3
period the company turnover its inventory. It is valuable for spotting under-stockings,
increase in cash flow by keeping a track of sales over the year. Inventory turnover
Average inventory
Current Asset
36
(Rs in million)
INTERPRETATION
From the above mentioned table it is clear that the ratio of the inventory in
the current asset is goes on increasing. The percentage of inventory in the current asset
is increased from 57.28 in the 2004 to 81.125 in the current year. And there is nearly
percentage
100
76.88 81.123
PERCENTAGE
80
57.28 60.82 61.06
60
40
20
0
2004 2005 2006 2007 2008
YEAR
This ratio indicates as to how fast the inventory is consumed and can be
highly useful when compared to the past so we are measuring how many times we
turned our inventory over during the year. Generally, a higher inventory turnover ratio is
place produces no revenue and increases the cost associated with maintaining those
inventories because a higher ratio is generally considered good from the point of view of
liquidity. If inventory is turning too slowly, it could indicate that it may be hampering your
cash flow.
ITR =
Average inventory
39
(Rs in million)
INTERPRETATION
The inventory turnover ratio trend over a period of five year was analyzed
and it was found that the inventory turnover ratio has fluctuated every year and has
decreased in the following year from 2007 to 2008. This shows that an idle turnover ratio
was maintained and this is considered as a positive indicator of operating efficiency and
good from the point of view of liquidity. The average inventory turn over days will come
7
5.8 5.57
6 5.37
4.81
5
RATIO
4
2.79
3
2
1
0
1 2 3 4 5
YEAR
DAYS IN INVENTORY
41
inventory holding period. A high number of days inventory indicates that there is a
lack of demand for the product being sold. A low day in inventory ratio may indicate
that the company is not keeping enough stock on hand to meet demands.
42
INTERPRETATION
From the above mentioned table it is clear that the ratio of the raw material in
the inventory is average. This shows that the production is normal and the raw material
140 130.68
120
NO OF DAYS
100
75.87
80 67.9 62.89 65.45
60
40
20
0
1 2 3 4 5
YEAR
Raw material
Raw material to inventory ratio=
Average inventory
material
2004 329.95 121.3 2.72
INTERPRETATION
From the above mentioned table it is clear that the ratio of the raw material in
the inventory is average. This shows that the production is normal and the raw material
4
3.0 6 2 .8 4
2.72 2.51
3
1 .7 1
RATIO
2
1
0
1 2 3 4 5
YEA R
finished goods
46
goods
2004 93.89 121.3 0.77
INTERPRETATION
From the table it is clear that finished goods constitute a vital part in the
inventory. And the level of the inventory is maintained at an average of nearly 75%.
0.95
0.89 0.89
0.9
0.85
RATIO
0.77 0.78
0.8 0.75
0.75
0.7
0.65
1 2 3 4 5
YEAR
The data for the analysis of both ABC and XYZ are confined only to the
stocks and materials related to the cold rolling mill. The analysis is based only on the
frequently buying items of the cold rolling mill. It is based on the consumption value
when the consumption is greater than 70% the item comes under the category “A”.
When the consumption of the item is nearly 20% it comes under the category “B”. When
the consumption of the item is nearly 10% it comes under the category “C”.
CATEGORY
1 A 18
2 B 34
3 C 8
Value of
Description of Book
Semiconductor
B
and IC’s 1266.833 102 129216.966 0.642798469 27
Capacitors 1271.624 85 108088.04 0.537691209 23 B
Diodes 1751.078 51 89304.978 0.444253606 18 B
Resistors 1650 120 198000 0.984964287 31 B
Diodes 3320 29.709 98633.88 0.490660855 20 B
Resistors 4033.296 27 108898.992 0.541725344 24 B
Fuses 6893.714 14 96511.996 0.480105401 19 B
Connectors 11.8 4000 47200 0.234799567 11 B
Brass & Bronze
B
castings 43.419 2760 119836.44 0.596134413 25
Aluminium
C
castings 74.371 141.6 10530.9336 0.052386836 5
Ductile iron
B
castings 320.688 564.57 181050.8242 0.900649475 30
Steel castings 45325.957 2.35 106515.999 0.529870985 53 A
Alloy steel
C
castings 1.165 7000 8155 0.040567595 3
Die steel
B
castings 218.979 1248 273285.792 1.359478512 40
Precision
A
castings 48967.419 45.61 2233403.981 11.11021798 59
Zin castings 298047 7 2086329 10.37858362 58 A
Gun metal
B
castings 16014 16 256224 1.274603483 39
Zinc die
A
castings 1890 630 1190700 5.923217055 55
steel strap
jumbo 1431 A
compound for B
conditioner A
INTERPRETATION
Close control is required for ‘A’ class items. Class ‘C’ items account for the bulk
of inventory items, and routine controls should be adequate. Among the major 60
items of the electronic parts,18 items fall under ‘A’ class. These items have
consumption value greater than 70% of total consumption. 34 items fall under ‘B’.
These items have consumption value of about 20% of total consumption.8 items fall
under ‘C’. These items have consumption value of about 10% of total consumption.
CATEGORY
53
75
80
NO OF ITEMS
60
40
10 15
20
0
A B C
CATEGORY
The data for the analysis of both ABC and XYZ are confined only to
the stocks and materials related to the cold rolling mill. The analysis is based only on the
frequently buying items of the cold rolling mill. It is based on the stock value when the
stock value of the item is greater than 35000 the item comes under the category “X”.
54
When the stock value of the item is greater than 10000 but less than 35000 it comes
under the category “Y”. When the stock value of the item is less than 10000 it comes
VALUE
1 X 36
2 Y 10
3 Z 14
Xyz
description of material Cost Book qty Totalcost
analysis
Sealless pump 24.705 8650 213698.25 Z
TOTAL 20102251.68
INTERPRETATION
There is 36 items fall under ‘X’ category. These items have stock value greater
than Rs35000. There is 10 items fall under ‘Y’ category. These items have stock
value greater than Rs10000. There is 14 items fall under ‘Z’ category. These
CHART NO.7
40 36
35
NO OF ITEMS 30
25
20
14
15 10
10
5
0
X Y Z
XYZ VALUE
1 Fast moving 20
2 slow moving 29
3 non moving 11
61
DESCRIPTION OF FSN
S
Capacitors 1271.624 85 108088.04
S
Diodes 1751.078 51 89304.978
S
Resistors 1650 120 198000
F
Diodes 3320 29.709 98633.88
F
Resistors 4033.296 27 108898.992
F
Fuses 6893.714 14 96511.996
F
Connectors 11.8 4000 47200
F
Brass & Bronze castings 43.419 2760 119836.44
F
Aluminium castings 74.371 141.6 10530.9336
N
Ductile iron castings 320.688 564.57 181050.8242
N
Steel castings 45325.96 2.35 106515.999
S
Alloy steel castings 1.165 7000 8155
F
Die steel castings 218.979 1248 273285.792
S
Precision castings 48967.42 45.61 2233403.981
S
Zin castings 298047 7 2086329
N
Gun metal castings 16014 16 256224
F
Zinc die castings 1890 630 1190700
N
steel strap jumbo 1431 mpw 48420.27 8.673 419949.0017
S
neck seal 30258.27 15 453874.05
S
grinding wheel for steel roll 17118.8 5 85594
grinding wheel for cast iron
S
roll 36142 6 216852
63
S
coolant oil for press 120 1780 213600
polishing compound for coin
F
blanks 35.65 760 27094
F
Gears 1088.657 252 274341.564
F
Aircraft parts AP-A1 6.284 32165 202124.86
F
Aircraftt parts AP-A6 55.001 8400 462008.4
Automative Air conditioner
F
parts 45.47 6720 305558.4
S
Suspension parts-1& 2 75276 1 75276
N
Brake drums BRAKE-1 HUB 155.147 2600 403382.2
F
CNC machining 51.861 10200 528982.2
S
Car engine parts 12900 5 64500
S
Car pedal parts 54266.5 4 217066
S
Car metal parts CNC-A1 20217 0.198 4002.966
F
Car matal parts CNC-A14 1052.7 10 10527
F
Car matal parts CNC-A32-1 177.273 11 1950.003
Computer products OEM &
F
ODM 58.926 1260 74246.76
S
Computer materials C10 55000 3 165000
S
Die & mold components 1821 19 34599
N
roll work z mill (forged rolls) 35290.18 40 1411607
S
rubber wiper sleeve 24.836 9350 232216.6
F
gp coil 0.5mm 38306 17.99 689124.94
64
S
(gold) roll grinding parts 44.282 2730 120889.86
Electronic parts OEM &
S
ODM 5547.824 51 282939.024
crane wheel 800 dia wear
S
resistant 162480 3 487440
Source (secondary Data)
INTERPRETATION
moving.
CHART NO.8
65
40
29
NO OF ITEMS
30
20
20
11
10
0
Fast Moving Slow Moving Non Moving
CATEGORY
Where,
TABLE NO.12
67
TABLE 13
68
EOQ MODEL
NO OF
SL.NO CATEGORY
ITEMS
CHART NO . 9
EOQ MODEL
9
NO OF ITEMS
8
7
6
5
4
3
2
1
0
Annual Ordering Cost of Inventory
Requirement Cost Per Material Per Carrying
(No. of MTs) Order in MT in Cost
Rupees Rupees (Expressed
as
Percentage)
CATEGORY
70
CHAPTER 4
The researcher has been able to find out the following important aspects from
manufacturing the stainless steel and has materials worth over crore of rupees.
2. Inventory control techniques like ABC analysis, FSN analysis, XYZ analysis,
analysis are very significant in Titan, in order to have a good control and
the 2004 to 81.125 in the current year. And there is nearly 40% increase in the
inventory.
4. This shows that an idle turnover ratio was maintained and this is considered
as a positive indicator of operating efficiency and good from the point of view of
liquidity. The average inventory turn over days will come around days 80.56
5. Among the major 60 items of the electronic parts,18 items fall under ‘A’ class.
These items have consumption value greater than 70% of total consumption. 34
items fall under ‘B’. These items have consumption value of about 20% of total
71
consumption.8 items fall under ‘C’. These items have consumption value of about
6. There is 36 items fall under ‘X’ category. These items have stock value
greater than Rs35000. There is 10 items fall under ‘Y’ category. These items have
stock value greater than Rs10000. There is 14 items fall under ‘Z’ category. These
moving.
4.2 SUGGESTIONS
The vital suggestions that can be considered for an effective management and
control of the inventories at Titan-precision engineering are clearly pointed out below:
72
1. Close control is required for ‘A’ class items. Class ‘C’ items account for the bulk of
2. ‘X’ items have high stock value. The company should take special effort of
3. The stock of Fast – Moving items has to be taken care, since non – availability of
these stock will lead to stock out costs. All non – availability stock can be examined
and immediate dispose of unnecessary Non – Moving stock can be made in order to
4. Since the percentage of inventory is more in the current asset the company
4.3 CONCLUSION
Managing and controlling the inventories, say raw materials, components, spare
parts, or finished goods is very significant and indispensable in any organization, since it
73
the officer familiar with ways to control inventories effectively so that there can be
optimum level and leave sufficient funds for more profitable channels which will
of inventory as well as how much should be ordered and when it should be ordered. All
these techniques are helpful in efficient management of inventories and balancing the