Description
Management is feeling that their huge amount of working capital is held up, so the management wants to know whether they can reduce it through inventory management.
Inventory Management APEX AUTO LTD.,
EXECUTIVE SUMMARY
G C T M Industry in India has traveed are ess, no! India is one o" the main #otton
manu"a#turing $ e%&orting #otten in the in india. The #otten in India is !ith ma'or &ayers and
gadag #o o&erative mi Ltd is one o" argest manu"a#turer o" #otten in India.
Inventory is a #entra &ro#ess in Manu"a#turing Unit. This Inventory is #on#erns to a
de&artments i.e., "rom Panning De&artment to (eing De&artment in !hi#h it &asses though
Produ#tion De&artment, )* De&artment, Logisti# De&artment, +inan#e De&artment, Costing
De&artment, and Commer#ia De&artment et#. (o managing o" Inventory is having !ide (#o&e
in manu"a#turing Com&any.
“INVENTORY MANAGEMENT”
Statement of the problem
,Inventory management and its e""e#ts on !or-ing #a&ita.
Management problem
Inventory Management APEX AUTO LTD.,
Management is "eeing that their huge amount o" !or-ing #a&ita is hed u&, so the
management !ants to -no! !hether they #an redu#e it through inventory management.
Reear!h problem
As a/ove stated management &ro/em the study !as #arried to -no! ho! inventory
management he&s in &ro&er maintenan#e o" !or-ing #a&ita, so the tite o" this study is ,
inventory management and its e""e#t on !or-ing #a&ita.
Ob"e!t#$e of the t%&'
0. To study the inventory management /ased on the ratios
1. To "ind out the im&a#t o" inventory on !or-ing #a&ita.
2. To study the inventory management and its e""e#tive #ontro through various te#hni3ues.
4. To suggest the measures "or im&roving the inventory eve.
S!ope of the t%&'
Inventory management /eing a very im&ortant #on#e&t in a the #om&any5s having a void
#overage o"ten #as "or the manageria attention. In the modern times inventory management has
/e#ome the integra &art o" the a #om&anies. (o a the "irm gives s&e#ia im&ortan#e "or
inventory management. The ma'or o/'e#tive o" the study is to e%amine the e""e#tiveness o"
inventory management system ado&ted /y A-ash industry6 the study mainy "o#uses on the
te#hni3ues used /y the #om&any to #ontro the inventory. The study aso #overs other areas i-e
the "inan#ia ratios "or the &eriod o" 1774 to 1778.
SU( O()ECTIVES*
0 To study the di""erent a##e&ts o" Inventory Management.
MET+O,O-OGY
Inventory Management APEX AUTO LTD.,
.r#mar' ,ata*
0. Intera#tion !ith &ersonne o" the #om&any
1. Dire#t O/servation in Inventory
Se!on&ar' ,ata*
0. 9aan#e (heet
1. Turnover (tatements
2. Monthy Inventory (tatements
4. Com&any *e#ords
:. Internet
Tool Ue&;
M(<E%#e has /een used "or #a#uations.
IN,USTRY .RO/I-E
/A(RICATION
Inventory Management APEX AUTO LTD.,
=hen used as an industria term, a&&ies to the /uiding o" ma#hines, stru#tures and other
e3ui&ment, /y #utting, sha&ing and assem/ing #om&onents made "rom ra! materias. (ma
/usinesses that s&e#iai>e in meta are #aed fab shops.
(tee "a/ri#ation sho&s and ma#hine sho&s have overa&&ing #a&a/iities, /ut "a/ri#ation
sho&s generay #on#entrate on the meta &re&aration, !eding and assem/y as&e#t !hie the
ma#hine sho& is more #on#erned !ith the ma#hining o" &arts.
META- /A(RICATION
Meta "a/ri#ation is a vaue added &ro#ess that invoves the #onstru#tion o" ma#hines and
stru#tures "rom various ra! materias. A "a/ sho& !i /id on a 'o/, usuay /ased on the
engineering dra!ings, and i" a!arded the #ontra#t !i /uid the &rodu#t.
+a/ri#ation sho&s are em&oyed /y #ontra#tors, OEM?s @Origina E3ui&ment
Manu"a#turersA and BA*?s @Baue<added *eseerA Ty&i#a &ro'e#ts in#ude6 oose &arts,
stru#tura "rames "or /uidings and heavy e3ui&ment, and hand raiings and stairs "or /uidings.
01 ENGINEERING
The "a/ri#ator may em&oy or #ontra#t out stee detaiers to &re&are sho& dra!ings, i" not
&rovided /y the #ustomer, !hi#h the "a/ri#ating sho& !i use "or manu"a#turing. Manu"a#turing
engineers !i &rogram CCC ma#hines as needed.
21 RA3 MATERIA-S
(tandard ra! materias used /y meta "a/ri#ators are6
Inventory Management APEX AUTO LTD.,
• Pate Meta
• +ormed And E%&anded Meta
o Tu/e sto#-, CD(M
o (3uare sto#-
o (e#tiona metas @I /eams, = /eams, C<#hanne...A
• =eding !ire
• )ard!are
• Castings
• +ittings
41 CUTTING AN, (URNING
The ra! materia has to /e #ut to si>e. This is done !ith a variety o" toos.
The most #ommon !ay to #ut materia is /y (hearing @meta!or-ingA6
(&e#ia /and sa!s designed "or #utting meta have hardened /ades and a "eed
me#hanism "or even #utting. A/rasive #ut<o"" sa!s, aso -no!n as #ho& sa!s, are simiar to
miter sa!s /ut !ith a stee #utting a/rasive dis-. Cutting tor#hes #an #ut very arge se#tions o"
stee with little effort.
9urn ta/es are CCC #utting tor#hes, usuay natura gas &o!ered. Pasma and aser
#utting ta/es, and =ater 'et #utters, are aso #ommon. Pate stee is oaded on a ta/e and the
&arts are #ut out as &rogrammed. The su&&ort ta/e is made o" a grid o" /ars that #an /e re&a#ed.
(ome very e%&ensive /urn ta/es aso in#ude CCC &un#h #a&a/iity, !ith a #arouse o" di""erent
&un#hes and ta&s. +a/ri#ation o" stru#tura stee /y &asma and aser #utting introdu#es ro/ots to
move the #utting head in three dimensions around the materia to /e #ut.
Inventory Management APEX AUTO LTD.,
51 /ORMING
)ydraui# /ra-e &resses !ith v<dies are the most #ommon method o" "orming meta. The
#ut &ate is &a#ed in the &ress and a v<sha&ed die is &ressed a &redetermined distan#e to /end the
&ate to the desired ange. =ing /ra-es and hand &o!ered /ra-es are sometimes used.
Tu/e /ending ma#hines have s&e#iay sha&ed dies and mandres to /end tu/uar se#tions
!ithout -in-ing them.
*oing ma#hines are used to "orm &ate stee into a round se#tion.
Engish =hee or =heeing Ma#hines are used to "orm #om&e% dou/e #urvature sha&es
using sheet meta.
61 Ma!h#n#ng
+a/ sho&s !i generay have a imited ma#hining #a&a/iity in#uding6 meta athes,
mis, magneti# /ased dris aong !ith other &orta/e meta !or-ing toos.
71 3el&#ng
=eding is the main "o#us o" stee "a/ri#ation. The "ormed and ma#hined &arts !i /e
assem/ed and ta#- !eded into &a#e then re<#he#-ed "or a##ura#y. A "i%ture may /e used to
o#ate &arts "or !eding i" muti&e !edments have /een ordered.
The !eder then #om&etes !eding &er the engineering dra!ings, i" !eding is detaied,
or &er his o!n 'udgment i" no !eding detais are &rovided.
(&e#ia &re#autions may /e needed to &revent !ar&ing o" the !edment due to heat.
These may in#ude re<designing the !edment to use ess !ed, !eding in a staggered "ashion,
Inventory Management APEX AUTO LTD.,
using a stout "i%ture, #overing the !edment in sand during #ooing, and straightening o&erations
a"ter !eding.
(traightening o" !ar&ed stee !edments is done !ith an O%y<a#etyene tor#h and is
some!hat o" an art. )eat is see#tivey a&&ied to the stee in a so!, inear s!ee&. The stee !i
have a net #ontra#tion, u&on #ooing, in the dire#tion o" the s!ee&. A highy s-ied !eder #an
remove signi"i#ant !ar&age using this te#hni3ue.
(tee !edments are o##asionay anneaed in a o! tem&erature oven to reieve residua
stresses.
81 /INA- ASSEM(-Y
A"ter the !edment has #ooed it is generay sand /asted, &rimed and &ainted. Any
additiona manu"a#turing s&e#i"ied /y the #ustomer is then #om&eted. The "inished &rodu#t is
then ins&e#ted and shi&&ed.
Inventory Management APEX AUTO LTD.,
COM.ANY .RO/I-E
Came o" the #om&any ; A.EX AUTO -T,
Address o" the )ead o""i#e ; M<0 &hase< BII, TATA -andra main road, industria
area ADITDAPU*, EAM()EDPU*<F2107G ICDIA.
+a%; 7H:8<1177707
Te; G0<H:8<147F80:, 147G740 $ 12F024H
E<mai; in"oIa&e%autotd.#om
Address o" the registered ; Catara' mansion, 9ista&ur< F20770,
O""i#e EAM()EDPU*, ICDIA
+a%; G0<H:8<1414:1H
=E9(ITE; !!!.a&e%autotd.#om
Address o" the UCIT II ; APEX AUTO LTD @UCIT IIA 9o#- no; 1
Dhar!ad Te#on &remises, J.I.A.D.9, P.9. *oad
Dhar!ad< :F7778, India
+a%; 7F2H<21G2104
Te; 7F2H<21G2104
E<mai; &i&Ia&e%autoimited.#om
Cature o" the organi>ation ; 9asi#ay this #om&any is heavy "a/ri#ation
Com&any. They are manu"a#turing /a#- hoe
Loader #om&onents and e%#avator
Com&onents
Ty&e o" organi>ation ; A&e% auto imited #om&any is &rivate imited
Com&any
Inventory Management APEX AUTO LTD.,
A(OUT ORGANI9ATION
Ape: A%to -#m#te& ;<If 'o% !an #mag#ne #t= 3e !an fabr#!ate #t1<>
A&e% Auto Limited is a &u/i#y 3uoted #om&any !ith a num/er o" sharehoders, /oth
Indian and +oreign. Promoted /y Mr. Atu Taun- in 0GG: !ith a modest #a&ita outay o" *s. 241
a-hs, A&e% today has a #a&ita outay o" *s. 0177 a-hs. A gro!th o" over 2:7K &er annum.
A#hieved /y &rodu#ing thousands o" dynami#ay stressed ma#hined #om&onents "or the
#onstru#tion e3ui&ment industry
The raison deter o" A&e% is that the emerging s#enario in &ost i/erai>ed India indi#ated
that the nation !as &oised to go in "or massive in"rastru#ture /uiding; roads, su&er high!ays,
&orts, &o!er &ro'e#ts, and so on. This !oud &ut immense &ressure on manu"a#turers o" earth<
moving e3ui&ment. A&e% eases the oad on them /y su&&orting the industry !ith &re#ision
engineered su/<assem/ies and ma'or assem/ies that #an go dire#ty into their e3ui&ment, su#h
as revoving "rames, main "rames, /ooms, arms, do>ers, /u#-ets, and so on.
As a #ase in &oint, !e?re &roud to have /een entrusted !ith the singe share o" /usiness
"or a ma'or "a/ri#ations that go into the ma-ing o" TATA )ita#hi?s to& seing e%#avators, the
EX<H7. Over the ast : years, !e have "a/ri#ated more than 07,777 #om&onents o" this &arti#uar
mode aone.
VISION
To /e re#ogni>ed as a &remier LUALITD manu"a#turer and su&&ier "a/ri#ated #om&onents,
em/odying thus the s&irit o" #ommitment and humanity.
MISSION
• As &er #ustomer s#hedue re3uirement "u"i it, Deiver on time, every time.
• An eye on &rodu#t 3uaity and integrity
Inventory Management APEX AUTO LTD.,
• )ighest &rodu#tivity, there/y o""ering a #ost advantage to a our #ients.
3h' Ape:?
Aristote < Gree- inventor o" the (#ien#e o" Logi# < re#ommends studying the theory o" ?The 4
9e#auses? /e"ore ma-ing your #hoi#e =hy A&e% "or your Ma#hined "a/ri#ation M
The 0st /e#ause deas !ith !hat is it made o" M
A&e% uses ony &rime 3uaity stee sheets and &ates &ro#ured "rom eading &ayers in the
industry < Tata (tee and (AIL.
The 1nd /e#ause deas !ith ho! is it made M
A&e% has state o" art Materia Pro#essing "a#iities in#uding Indias argest aser #utting
ma#hine. And e%#eent Produ#tion Engineering systems set u& /y a highy e%&erien#ed and
te#hni#ay 3uai"ied team o" engineers.
The 2rd /e#ause deas !ith !hat is made M
9ased on our #ustomer?s dra!ings and design, A&e% manu"a#tures dynami#ay stressed
ma#hined "a/ri#ations #on"orming to a the s&e#i"i#ations aid do!n /y the #ustomer.
The 4th /e#ause deas !ith !hy is it made thus M
A&e% "oo!s the "irst three &re#e&ts so that the end #ustomer gets a !ord<#ass &rodu#t
!hi#h !i !ithstand the utimate test o" time.
Inventory Management APEX AUTO LTD.,
KEY AWARDS WON
? +or sa"ety in manu"a#turing &ro#ess a!ards @ess a##ident in manu"a#turing &ro#essA "or
#ontinuous 2 years "orm Te#o #onstru#tion e3ui&ment imited
? +or MICIMUM *EEECTIOC a!ard "orm Te#o #onstru#tion e3ui&ment imited
SWOT Analysis of the Company
APEX ATO !ID KEY STREN"T#S
01 STRONG .RO,UCT ,EVE-O.MENT
As &er the s&e#i"i#ation "rom Te#on the ne! &rodu#t is /een deveo&ed
0. 9y the highy 3uai"ied interna engineering de&artment
21 STRONG MERC+AN,ISING TEAM
Te#hni#ay 3uai"ied and high s-ied Mer#handising de&artment is another asset o" the
#om&any, !ho &ays a ma'or roe in e%e#uting the orders utmost e""i#ienty to the satis"a#tion o"
9uyers.
41 .RO/ESSIONA--Y MANAGE,*
aA Com&any has t!o units in Dhar!ad, one is A&e% auto Ltd Unit I and the other is A&e% auto
Ltd Unit II
/A Unit I is headed /y Mr1 Ar$#n& Ga%r= Unit II is headed /y Mr1 .ra$at @%mar Rath
Inventory Management APEX AUTO LTD.,
51 /ACTORIES ENGINEERE, TO .RO,UCT S.ECI/IC*
A their manu"a#turing units are engineered to &rodu#t s&e#i"i# and managed /y e""e#tive
and e""i#ient interna engineering de&artment.
61 AUA-ITY CONTRO- SYSTEM*
There is an inde&endent 3uaity audit team in &ro#ess #ontro system in a the "a#tories,
!hi#h has given 3uaity &rodu#tion #onsistenty.
71 SOURCING O/ RA3 MATERIA-S UN,ER VIGI-ANCE O/ AUA-ITY
AU,IT SYSTEM*
They sour#e a their ra! materias 077K "rom !ithin India. )o!ever, they have a rigid
#ontro on their 3uaity #ontro system !here /y they ensure that a the ra! materias are
&rodu#ed as &er their 3uaity standard eve /e"ore it gets dis&at#hed to their "a#tories.
81 IN +OUSE -A(*
They have a a/ situated in the ma'or &ro#urement #enters, su#h as in Dhar!ad and
Eamshed&ur to su&&ort their 3uaity #ontro team to #arryout the various 3uaity tests at a eve
on!ards to ensure that the &rodu#t is &rodu#ed a##ording to their 3uaity in<house.
B1 .RECS+I.MENT INS.ECTION TO MAINTAIN 9EROCC-AIM /ROM
(UYERS*
A thorough Ins&e#tion /y In<house Luaity Contro team and &re<shi&ment Ins&e#tion /y
/uyer re&resentative "or a their &rodu#ts he&s #om&any to maintain >ero<3uaity #aims
&osition !ith a their /uyers.
Inventory Management APEX AUTO LTD.,
D1 CON/I,ENCE O/ T+EIR (UYERS*
A the /uyers as o" today have /een !or-ing !ith them sin#e de#ades and they started !ith
them on #ontinues /asis !ith enhan#ed voume. This has given them huge #on"iden#e as the
#on"iden#e eve o" their /uyers is very high in their &rodu#ts, 3uaity, timey deiveries and
#ommitment to!ards !or-.
They have /een a!arded "or 2 #onse#utive years "or minimum re'e#tion and "or sa"ety in
&ro#ess o" manu"a#turing /y Te#o #onstru#tion e3ui&ment imited
APEX ATO !TD WEAKNESS
Co su#h entity has /een identi"ied so "ar.
APEX ATO !TD KEY OPPORTNITIES
Chan#es to get more &rodu#ts to manu"a#ture "orm the 9uyer i.e. Te#on #onstru#tion e3ui&ment
imited
APEX ATO !TD KEY T#REATS
More<3uai"ied #om&etitors
Inventory Management APEX AUTO LTD.,
CUSTOMER NAME
A&e% auto td unit II has having ony one #ustomer that is TELCOC COC(T*UCTIOC
ELUIPMECT LTD
SU..-IERS NAMES
SU..-IERS NAME -OCATION
AEE6 A@S+ATA ENTER.RISES= +U(-I
AE04 AS+A E-ECTRICA- F SA-ES +U(-I
AE56 A,ITYA E-ECTRICA- SA-ES COR.ORATION +U(-I
AE60 ANAN, AIR-INE ACCESSORIES +U(-I
AE62 A(+I ENGINEERING 3OR@S (ANGA-ORE
AE6B AMAR E-ECTRICA- 3OR@S +U(-I
AE74 AN,ANUR .I.ES ,ISTRI(UTORS ,+AR3A,
(E40 (E-GAUM CNC A..-ICATIONS .VT1 -T, (E-GAUM
(E47 ES+A@ ,A,A (AM(OO3A-A MUM(AI
(E4B (1 MA+EN,RA F (ROS ,+AR3A,
(E50 (ASAVES+3AR @+ANAVA-I ,+AR3A,
(E55 (E-UR IN,USTRIA- GASES ,+AR3A,
(E56 (1(1 ENTER.RISES +U(-I
CEE4 C+AC+RA SERVIUCES )AMS+E,.UR
CEE5 C+AITANYA SA-ES .VT1 -T,1 )AMS+E,.UR
,E0D ,YNAMIC ,RIVES +U(-I
,E2E ,E-TA /URNITURE .RIVATE-IMITE, C+ENNAI
EE28 EURE@A /OR(ES -T, ,+AR3A,
/EE4 /A(ROCTEC+ ENGINEERS ,+AR3A,
GEEB GOUTAM MAC+INE TOO-S +U(-I
GE27 GAYATRIMATA IN,USTRIES ,+AR3A,
+E0E +Y,RO.AC@;IN,IA> .VT -T, (E-GAUM
IE0B IN,US MAR@ETING (E-GAUM
)EE4 )@AY ENTER.RISES +U(-I
@EE8 @AMAT+ ENTER.RISES (E-GAUM
@EEB @A.I-A MAR@ETING ,+AR3A,
@E0E @ARNATA@A MATERIA- TESTING RESEARC+ (E-GAUM
@E47 @U-@ARNI (OO@ STA-- F STATIONERIES ,+AR3A,
MEEB MARUTI IN,USTRIA- SERVICE CENTRE (ANGA-ORE
ME08 MA,RAS +AR, TOO-S .VT -T, C+ENNAI
Inventory Management APEX AUTO LTD.,
ME0D MAN)UNAT+ GARMENTS ,+AR3A,
NE07 NAVYA ENTER.RISE +U(-I
OEE4 OMEGA /A(RICATIONS ,+AR3A,
.EE2 .ET+E (RA@E MOTOR .VT1 -T, RATNAGIRI
.EE7 .RAXAIR IN,IA .VT -T, (ANGA-ORE
.E2B .RESSURE CONTRO- EAUI.MENT @O-@ATTA
.E48 .AVAN E-ECTRICA- COM.ANY +U(-I
REE0 R1R1 ASSOCIATES +U(-I
REE8 RENU@A ENGINEERING 3OR@S ,+AR3A,
RE46 RITTA- IN,IA .VT -IMITE, (ANGA-ORE
SE0D SONA STEE- ENTER.RISES MUM(AI
SEB6 SA@S+AM AUTOMATION SYSTEMS +U(-I
SEB8 S+REE GANES+ GAS IM.-EMENTS AN, SER +U(-I
TEE0 TARAC@ ENGG SERVICES ,AVENGIRI
TEE4 TEC+NO COMMERCIA- COR.ORATION )AMS+E,.UR
TE40 TATA STEE- -IMITE, (ANGA-ORE
VEE0 VA-)I F (ROT+ERS +U(-I
VEE8 VI)AYS+EER ,ISE- SA-ES AN, SERVICES +U(-I
VEEB VO-TAS -IMITE, (ANGA-ORE
VE05 VI@AS VI,+UTI@ARAN .VT -T, ,+AR3A,
3EE7 3E-, IN,IA CONSU-TANCY ,E-+I
YEE4 YA--A..A +EGGERI ,+AR3A,
A&e% Auto Ltd Unit II is having a numerous su&&iers. They mainy &ur#hase *a!
Materias i-e M( &ates, 9ush (to&&ers, (eat Curve et# "rom Indian su&&iers.
Inventory Management APEX AUTO LTD.,
ORGANI9ATION STRUCTURE
Administration Assistant
Produ#tion
de&artment
)ead
(u&&y
Chain Mgmt
)ead
Luaity
Assuran#e
)ead
=or-ers (u/ordinate
Mem/ers
(tore
(u&ervisor
Produ#tion
(u&ervisor
Ma#hine
O&erators
Ma#hine
De&artment
)ead
Assistant
L. A
)e&ers
Produ#tion
Assistant Genera
Manager
)uman *esour#es
Assistant Genera
Manager
C E O
General
Manager
.ro&%!t#on .lann#ng F
Control Manager
/#nan!e Manager
Manag#ng ,#re!tor
Inventory Management APEX AUTO LTD.,
01 .eronnel ,epartment
This de&artment is amost i-e a human /rain, sin#e it is the human /eings that o&erate it.
This de&artment is #on#erned !ith im&ementation o" the &ans, !ith the !e"are o" the &ant,
!ith the industria reations and a/ove a sa"ety and se#urity o" the &ant and the !or- "or#e is its
&rime #on#erns. This de&artment oo-s a"ter the su/sidiaries i-e re#ruitment see#tion training
and indu#tion, #anteen, #ommunity deveo&ment dis#i&inary a#tions et#., !e"are, se#urity,
guesthouse, medi#a "a#iity et#., @As &er Indian +a#tories A#t 0G4F.A
Team A&e% Pro"essionay managed !ith a ri#h /end o" e%&erien#e and enthusiasti#
youth, Engineers, Di&oma )oders, dra"t men, ITI !eders and "itters, Gas #utters, !or-ers and
+a/ri#ation E%&erts.
Let5s go through the &ro#ess o" the *e#ruitment in A&e% Auto Ltd Unit II.
*e#ruitment is &ro#ess o" sear#hing the &ros&e#ting #andidate, stimuating and
en#ouraging them to a&&y "or the 'o/. The a/ove meaning says that every organi>ation !ant
s-ied !or-ers so A&e% Auto Ltd Unit II aso re#ruit #andidates as "oo!s , they "irsty #he#-
the organi>ation #uture !hi#h ty&e o" em&oyees needed in organi>ation and they aso #he#-
em&oyment #ondition in unit.
Inventory Management APEX AUTO LTD.,
They are sear#hing the #andidates in t!o !ays one is Advertisement and the other is
manua sear#hing. In advertisement they give "irsty the ad>5s i-e Dra"t Adv, Cient revie! adv
and Pa#e adv, and then they re#eive the #as then a##ess their CB5s. In manua sear#hing
&ro#ess they sear#h the em&oyee in &an sear#h, identity sear#h, and #onta#t sear#h, then they
#he#- the #andidates interest a"ter that they arrange meeting "or see#tion &ro#ess
Sele!t#on pro!e (ee#tion is a &ro#ess o" #he#-ing the #andidate5s -no!edge,
/ehavior, (-is, e%&erien#e, and 3uai"i#ations et# to see#t and &a#e the #andidate their #orre#t
&osition.
21 Store ,epartment
The ra! materias are stored se&aratey under materia #e in &rodu#tion de&artment6 as
&er the demand this de&artment does the !or- o" re#eiving and issuing o" materias.
41 .%r!hae ,epartment
Against the a&&roved &ur#hase re3uisition the de&artment &ur#hases o" ra! materia semi
"inished goods and A##essories and other needs o" the various de&artments. In order to ma-e the
!or- e""i#ient it has the system o" su/ #ontra#tors. (o the &ur#hase de&artment does the #reation
o" su/ #ontra#tors and vendors. This de&artment is guided /y the main motto the &ant and other
de&artments !or-ing. Let5s have a oo- on the "o! #hart o" the &ur#hase o" ra! materias in
A&e% Unit II
Luotations re3uest to one or more
vendors a##ording to re3uirement
Luotations Com&arisons
9est Cegotiation
Pur#hase Order
#reation
Pur#hase Order send to
vendor @su&&ierA
+oo! U& and &ro#ure the
materia "or &rodu#tion
Materia indenting
@As &er #ustomer
s#hedueA
Inventory Management APEX AUTO LTD.,
51 ,#pat!h ,epartment
The dis&at#h o" materias and "inished goods is done in a very e""i#ient !ay.
61.ro&%!t#on ,epartment
This de&artment entrusted !ith the tas- o" the &rodu#tion o" Do>er 9ade, Loader
9u#-et, Carro! 9u#-et, 9a#- )oe Main +rame, 9oom, Arm, Counter =eight, )eavy Duty
9u#-et, *evoving +rame and Tra#- +rame. +rom our very in#e&tion at Eamshed&ur in 0GGH and
at Dhar!ad in 0GGG, our in"rastru#tura "a#iities have /een meti#uousy &anned out !ith an eye
to!ards satis"ying the e%a#ting standards o" !ord #ass &ayers in the Earth Moving Industry.
Let5s have a oo- on the &ro#ess o" manu"a#turing &ro#ess in A&e% Unit II, /asi#ay this
#om&any is heavy "a/ri#ation #om&any, they are manu"a#turing 9ACJ )OE LOADE*
COMPOCECTD $ EXCABATO* COMPOCECT(. +oo!ing are the #om&onents. E)OC
DEE* @EDA 9oom, Arm, Loader Arm and EXCABATO*( 87, 007, 017, 9oom and
EXCABATO*( 87, 007,017 Arm. The /eo! sho!ing is the manu"a#turing &ro#ess o"
E%#avators<87 9oom.
Inventory Management APEX AUTO LTD.,
/loG !hart of E:!a$ator H 8E
COCTICUE
1
CD
(TAGE A((EM9LD
TE 178FG, TE 178G7
TA 77122N72
OUT O+ +IXTU*E
0
(T
(TAGE =ELDICG
IC +IXTU*E
(U9 A((EM9LD 0
(T
(TAGE
TA 700H4N77, TA 77122N18,
TA 77122N70, TA77122N7F,
TA77122N7:, TA77122N7H
TA77122N78
9OOM ECD 9*ACJET
A((EM9LD
TC 77::FN70@*)A, TC
77::FN71@L)A
9EBELICG O+ PLATE(
TA 77122N70, TA11722N78,
TA 77122N7F
Inventory Management APEX AUTO LTD.,
COCTICU
E
A((EM9LD OUT O+
+IXTU*E
TA 77122N71
(ETTICG
LE+T OBE* =ELDICG
TA 7122N1H
+IT ACD =ELD
*O9OT =ELDICG
*e'e#tionN
*e#ti"i#ation
IC(PECTIOC
Tota ength 2817ON< 4mm
To& ug distan#e =*T 9oom
End 9ra#-et, 9ottom ug
distan#e
P
COCTICUE
OUT O+ +IXTU*E
1
CD
(TAGE =ELDICG
IC +IXTU*E
TA 77122N7G, TA 77122N07
TA 77122N74
LUG +ITTICG
TA 77122N04, TA 77122N0:,
TA 77122N0H, TA 77122N08,
Inventory Management APEX AUTO LTD.,
Cot O-
OJ
Cot O-
OJ
Cot O-
OJ
Cot O-
MAC)ICICG
DE(PATC)
*ECTI+ICATIOC
*EEECTIOCN
*ECTI+ICATIOC
*EEECTIOCN
*ECTI+ICATIOC
IC(PECTIO
C
UT
TE(TICG
D*E((ICG
IC(PECTIO
C
IC(PECTIO
C
COCTICU
E
Inventory Management APEX AUTO LTD.,
OJ
Man%fa!t%r#ng pro!e of E:C8E (oom
Manu"a#turing &ro#ess o" E%< 87 9oom is having severa ste&s aready you -no!
in the "o! #hart no! /eo! sho!ing manu"a#turing &ro#ess in detai
0. *A= MATE*IAL(
In every manu"a#turing &ro#ess ra! materias must re3uired there "or APEX AUTO
LTD @UCIT IIA &ur#hase ra! materias "rom its main /ran#h at EAM()EDPU* and "orm A&e%
Auto Ltd @Unit IA. (ome materias dire#ty #omes to Unit II /ut some materias "irsty #omes to
Unit I and a"ter some &ro#ess it is send to Unit II. Then the stores de&artment sends materias to
&rodu#tion de&artment "or &rodu#tion
1. 9OOM ACD 9*ACJET A((EM9LD
In this &ro#ess 9oom and 9ra#-et assem/ed or &rodu#ed. )ere "irsty they 'oin
17mm 9-t Pate @*)A @TC 77::FN70A and TA77122N11 a##ording to the diagram. Then they 'oin
17mm 9-t Pate @L)A @TC 77::FN71A and TA 77122N00. A"ter that /a#- u& /ars are 'oin at the
/ottom o" /oth 17mm 9-t &ates. Then these t!o 'ointed /y the &ate 9a#- u& &ate @TA
77122N0GA, then they 'oin one s3uare &ate "or maintaining re3uired dimensions a"ter !eding o"
a this &arts this #om&ete the manu"a#turing o" 9oom And 9ra#-et Assem/y.
Inventory Management APEX AUTO LTD.,
2. 9EBELICG O+ PLATE(
(ome &ates /eveed /y Unit I and those &ates are To& roing &ate@TA 77122N70A,
(ide /end &ate L)@TA 77122N78A and side /end &ate *)@TA 77122N7FA
4. IC +IXTU*E (U9 A((EM9LD 0
(T
(TAGE
In this &ro#ess one su/ assem/y !i /e done in this stage 9O(( @TD700H4N77A is
'oined to To& roing &ate @TA 77Q122N70A at one side then at the to& o" the 9O(( they 'oin (ide
/end &ate L) @TA 77122N78A. A"ter that inside o" the 9O(( they 'oin 9O(( 9a#- u& Pate @TA
77122N18A. Then in the midde o" To& roing &ate and (ide /end &ate they 'oin Gasset
&ate@TA77122N7:A and near to that 9end Gasset &ate is 'oined !ith re3uired dimension, a"ter
that (ide /end &ate *)@TA 77122N7FA is 'oined a##ording to diagram so this #om&ete (u/
assem/y "irst stage.
:. OUT O+ +IXTU*E +I*(T (TAGE =ELDICG
A"ter #om&etion o" (u/ assem/y "irst stage ea#h &art is manuay !ed in this
&ro#ess.
H. (ECOCD (TAGE A((EM9LD
In this &ro#ess 9a#- u& /ar @TE178FGA 72 9a#- u& /ar@TE178G7A are atta#hed in
the inside &art o" 9ottom roing &ate @TA77122N72A at the right side !ith re3uired dimension
a##ording to diagram
8. OUT O+ +IXTU*E
In this &ro#ess se#ond stage !eding &ro#ess is done manuay.
F. IC +IXTU*E
In this &ro#ess "irsty &re&ared 9oom and 9ra#-et is 'oined /y using &ates su#h as
Cover &ate Hmm @TA77122N7GA and Cover &ate Fmm @TA77122N07A, a"ter that there is some
&a#e !hi#h is em&ty so that &a#e is /een "ied /y &ates Ta&er side Pate@TA77122N74A 1 &ates
a##ording to diagram. (o this &ro#ess "inishes /oom and /ra#-et assem/y.
Inventory Management APEX AUTO LTD.,
G. LUG +ITTICG
In this &ro#ess Lugs are "itted to the &re&ared #om&onent !hi#h are To& ug and
/ottom ugs and To& !ashers ugs and 9ottom !asher Lugs. +irsty /ottom ugs are 'oined to
ea#h other and then those ugs are atta#hed to the /ottom o" the &re&ared #om&onent. A"ter
'oining the /ottom ugs the to& ug is 'oined to the to& o" &re&ared #om&onent !ith re3uired
dimension or s&a#e so as to #om&ete this &ro#ess.
07. IC(PECTIOC
This is an im&ortant stage in manu"a#turing &ro#ess. In this stage they #he#- tota
ength o" the #om&onent. Tota ength shoud /e 2817mm i" there ess di""eren#e o" 4mm then
there is no &ro/em it must not e%#eed 4mm, then they aso #he#- #entre &oint o" the #om&onent
and to& ug distan#e to the /oom and /ra#-et, and /ottom ug distan#e o" the #om&onents i" there
is any &ro/em "ound then they go "or re#ti"i#ation o" the #om&onent.
00. A((EM9LD OUT O+ +IXTU*E
In this &ro#ess they 'oin one To& #over &ate @TA77122N71A to the /oom or &re&ared
#om&onent a##ording to the standard diagram and they aso 'oin RM5 &ate @TA77122N1FA atta#h
to the to& ugs so this #om&etes the &ro#ess o" assem/y.
01. *O9OT =ELDICG
*o/ot is a &rogramma/e muti&i#ation, mani&uate design to materia &art, toos
or s&e#iai>ed devi#es are t
o #arry out s&e#i"i# tas-.
In *o/ot !eding &ro#essed #om&onents are !ed /y *o/ot ma#hine. +irsty they
set the &rograms to the ro/ot "or !eding the #om&onents. Every #om&onent has is its o!n
!eding &rogram a##ording to the standard dra!ing o" the #om&onents, a"ter instaation o" the
Inventory Management APEX AUTO LTD.,
E% S 87 &rogram the !eding &ro#ess o" EX< 87 /oom starts, Mig !eding !ire is /een used /y
the ro/ot to !ed the #om&onent.Q
02. LE+T OBE* =ELDICG
A"ter #om&etion o" the *o/ot !eding there are some s&a#es e"t !hi#h are !ed
manuay /y !eders. In this &ro#ess they aso 'oin 9O(( *een"or#ement &ate @TA77122N1HA at
the to& and /ottom side o" the 9O(( a##ording to the diagram.
04. (ETTICG
In this &ro#ess they maintain re3uired dimension in various &arts o" the #om&onents
through the gas heating !hi#h in#udes Organ and Co
0:. IC(PECTIOC
In this &ro#ess they measure the #om&onents /y using measuring s#ae, try s3uare,
Bernier and gauges et#.
0H. MAC)ICICG
Ma#hining &ro#ess means removing the rough "a#e as &er the standard dra!ing. In
ma#hining &ro#ess they have t!o ty&e o" 'o/s one is miing and the other is /oring, in this
&ro#ess they are using t!o ty&e o" ma#hines one ()= that means hidden #ontro ma#hine and
the other is +anu# #ontro ma#hine. To redu#e heat in the &ro#ess they are using #ooant oi
/e#ause it he&s to redu#e the heat "or insert !are and tear and it he&s to smooth miing and
/oring o" the #om&onent in ma#hining they are having there stages
0. *ough stage
1. (emi "inish
2. +inish (tage
In E%< 87 /oom #om&onents are having mainy "our /ores /oss /ore must have the si>e o" 8:mm
and ug /ore must have the si>e o" ::mm and /ra#-et must have H7mm.
08. IC(PECTIOC
Inventory Management APEX AUTO LTD.,
In this &ro#ess they use the "oo!ing instruments to #he#- !eather the ma#hining
&ro#ess is &ro&ery done or not
0. 9ore dia gauge
1. Mi#rometer
2. Bernier
4. Measuring s#ae et#
0F. D*E((ICG
Dressing is the very im&ortant stage in manu"a#turing &ro#ess in this &ro#ess they
#ean the #om&onents /y using grinding ma#hine and sander ma#hine to remove s&atters #hi&s
et#, here they aso "it some items to &re&are #om&onents to a##ording to standard diagram.
0G. IC(PECTIOC
In this &ro#ess they are #he#-ing !eding de"e#ts in the #om&onents /y using
Utrasoni# Te#hni3ue @UTA ma#hine, the "oo!ing are the de"e#ts !e #an "ind /y using UT
ma#hine.
0. 9o! )oder area
1. Pro&er &enetration
2. Porsity et#
17. DI(PATC)
A"ter #om&etion o" a this &ro#esses the 3uaity assuran#e de&artment #he#-s the
3uaity o" the #om&onent and a"ter #he#-ing they "inay dis&at#h the &rodu#t so this #om&ete
the manu"a#turing &ro#ess o" EX<87 /oom mode.
A&e% Auto Limited is in the servi#e o" gaints in the "ied o" E%#avator
manu"a#turing Co. TELCOC "or H Dears /y maintaining a high LUALITD $ (JILL. And "or its
e""orts, it has /een #erti"ied /y TELCOC, and other 3uaity maintaing institutions.
Inventory Management APEX AUTO LTD.,
INVENTORY MANAGEMENT
Management o" inventory assumes im&ortan#e due to the "a#t that investment in
inventory #onstitutes one o" the ma'or investments in #urrent assets.
The term inventory re"ers to the sto#-&ie o" the &rodu#ts a "irm is o""ering "or sae and
the #om&onents that ma-e u& the &rodu#t. The assets !hi#h "irms store as inventory in
anti#i&ation o" need are;
@iA RaG Mater#al;
These re&resent in&uts &ur#hased and store to /e #onverted into "inished &rodu#ts in
"uture /y ma-ing #ertain manu"a#turing &ro#ess on the same.
@iiA 3orI #n .ro!e;
These re&resent semi<manu"a#tured &rodu#ts !hi#h need "urther &ro#essing /e"ore they
#an /e treated as "inished &rodu#ts.
@iiiA /#n#he& Goo&;
These re&resent the "inished &rodu#ts ready "or sae in the mar-et.
Inventory Management APEX AUTO LTD.,
@ivA Store an& S%ppl#e;
These re&resent that &art o" the inventory, !hi#h does not /e#ome a &art o" "ina &rodu#t
/ut are re3uired "or &rodu#tion &ro#ess. They may /e in the "orm o" #otton !aste, oi and
u/ri#ants, soa&s, /rooms, ight /u/s et#. Cormay, they "orm a very minor &art o" tota
inventory and do not invove signi"i#ant investment.
Let us have a oo- on Di""erent Inventory Management Bie!s. Means em&hasis roe o"
Inventory Management in di""erent (e#tors.
Physi#a Inventory
Management
+inan#ia Inventory
Management
Logisti# Inventory
Management
INVENTORY MANAGEMENT
INVENTORY MANAGEMENT
4
V
I
E
3
S
Inventory Management APEX AUTO LTD.,
Inventory Management is #onsisting o" 2 hands. The "irst hand as sho!n in the diagram
is that Physi#a Inventory Management, (e#ond one is +inan#ia Inventory Management and the
ast one @third oneA is Logisti# Inventory Management.
The reason /ehind o" dividing these vie!s is; to gather the in"ormation very easiy and
"or easy to understanding o" ea#h vie! thoroughy. Let us see the Meanings o" ea#h vie! one /y
one.
.h'#!al In$entor' Management
Mean#ng;
,Jee&ing o" goods is aso a ty&e o" management. =henever re3uirements #omes "rom
the &rodu#tion de&artment, &roviding o" those re3uired materias in a &ro&er manner $ &roviding
those at the s&e#i"ied &eriod, is the main motto o" Physi#a Inventory Management..
(enef#t for +ol&#ng In$entor' *
(enef#t #n .%r!ha#ng
(enef#t #n .ro&%!t#on
(enef#t #n 3orIC#nC.ro!e
(enef#t #n Sale
Ob"e!t of In$entor' Management*
Usuay, the #om&any is "a#ed !ith the "oo!ing #on"i#ting o/'e#tives in the area o"
inventory management;
Inventory Management APEX AUTO LTD.,
0. To #arry ma%imum inventory in order to "a#iitate e""i#ient and smooth &rodu#tion
and saes o&erations.
1. To minimi>e investment in inventory "or ma%imi>e the &ro"ita/iity.
9oth over<investment and under investment in inventories is undesira/e as /oth invove the
#onse3uen#es. The o$erC#n$etment #n$ol$e the !oneJ%en!e l#Ie;
iA Unne#essary /o#-ing o" "unds in inventory and hen#e oss o" &ro"it.
iiA E%#essive storage and Insuran#e Cost.
i. *is- o" i3uidity. The inventories on#e &ur#hased and stored are normay di""i#ut to
dis&ose o"" at the same vaue.
The %n&erC#n$etment #n$ol$e the !oneJ%en!e l#Ie;
/. I" su""i#ient sto#- o" ra! materia and !or- in &ro#ess is not avaia/e, it may resut into
"re3uent interru&tions in &rodu#tion.
#. I" su""i#ient sto#- o" "inished goods is not avaia/e it may not /e &ossi/e "or the
#om&any to serve the #ustomers &ro&ery and they may shi"t to the #om&etitors.
Thus, it #an /e said that the o/'e#tive o" inventory management is to minimi>e the
investment in inventory !ithout a""e#ting &rodu#tion or saes o&erations.
Inventory, as a #urrent asset, di""ers "rom the other #urrent assets /e#ause ony "inan#ia
managers are not invoved. *ather, a the "un#tiona areas, "inan#e, Mar-eting, Produ#t $
Pur#hasing are invoved.
The 'o/ o" the "inan#ia manager is to re#on#ie the #on"i#ting vie!&oints o" the various
"un#tiona areas regarding the a&&ro&riate inventory eves in order to "u"i the overa o/'e#tive
o" ma%imi>ing o" o!ner5s !eath.
TGoC(#n S'tem;
Inventory Management APEX AUTO LTD.,
Under this system, the inventory items are grou&ed into t!o #ategories. In one grou& or
/in, su""i#ient 3uantity is -e&t to meet the #urrent re3uirements over a designated &eriod o" item.
In another grou& or /in, a sa"ety sto#- is maintained to meet the re3uirements o" inventory at
times !hen the sto#- in the "irst /in is e%hausted and re<ordering o##urs.
/#nan!#al In$entor' Management
Mean#ng;
,*e#ording, maintaining and evauating o" sto#-s in a vaue terms is -no!n as +inan#ia
Inventory Management.. In other !ords vauation o" sto#-s, and #ontroing o" ordering and
hoding #osts and aso maintaining o" su""i#ient vaued sto#-s in Inventory is -no!n as +inan#ia
Inventory Management..
+inan#ia Inventory Management is again divided into three di""erent #ategories.
0A 9ased on Bauation
1A 9ased on Cost Anaysis
2A 9ased on +inan#ia (tatement
0> (ae& on Val%at#on
There are num/er o" generay a##e&ted methods o" determining the #ost o" inventories at
the #ose o" the a##ounting &eriod. The see#tion o" a suita/e method assumes signi"i#an#e in
vie! o" the "a#t that it has a dire#t /earing on the #ost o" goods sod and #onse3uenty on &ro"it.
Inventory Management APEX AUTO LTD.,
There"ore, the method shoud /e see#ted in the ight o" &ro/a/e e""e#ts on &ro"its over a &eriod
o" years.
Note;
It may not /e out o" &a#e to mention that on#e a method is see#ted, it must /e used
#onsistenty and #annot /e #hanged "rom year to year.
The dis#ussion here o" the methods to vaue inventory shoud, there"ore /e vie!ed in this
&ers&e#tive.
/#rt In /#rt O%t ;/I/O> Metho&;
The +I+O method o" vauation o" inventory is /ased on the assum&tion that the inventory
is #onsumed in #hronoogi#a order, that is, those re#eived "irst are issuedN#onsumed "irst and
vaue "i%ed a##ordingy. The merit o" +I+O method is that the &hysi#a "o! o" materias
mat#hes the "o! o" #ost.
-at #n /#rt O%t ;-I/O> Metho&;
Under the LI+O method, the #ost o" goods sod and the vaue o" #osing inventory #an /e
determined ony a"ter the "ina ot o" the year has /een re#eived. This is /e#ause o" the
assum&tion underying the vauation o" inventory, a##ording to this method. As the name LI+O
suggests, the use o" inventory is vaued on the /asis o" the inverse se3uen#e o" re#ei&ts. (in#e
the LI+O method assumes that the atest item in is the "irst item out, the #urrent #ost o" materias
are mat#hed !ith the #urrent seing &ri#eN#urrent revenues. This mat#hing o" #urrent #osts !ith
#urrent revenues is the essen#e o" the argument "or the LI+O method.
A$erage Cot Metho&;
Inventory Management APEX AUTO LTD.,
A##ording to average #ost method, ea#h &ur#hase is added to inventory and an average
#ost determined. Materias are #harged into #ost o" saes at this average unti another ot is
re#eived, !hen a ne! average unit inventory #ost is #a#uated.
Cote; There are so many other than these a/ove methods /ut most !ide use"uy methods are
these three so here !e dis#ussed those three methods ony.
2> (ae& on Cot Anal'#
Cot of +ol&#ng In$entor'* <
One o&erating o/'e#tive o" inventory management is to minimi>e #ost. E%#uding the
#ost o" mer#handise, the #osts asso#iated !ith inventory "a into t!o /asi# #ategories; @iA
Ordering or A#3uisition or (et<u& Costs, and @iiA Carrying Costs. These #osts are an im&ortant
eement o" the o&timum eve o" inventory de#isions.
0A Or&er#ng Cot;
It is the "i%ed #ost o" &a#ing $ re#eiving an inventory order. Li-e @aA Preå a &ur#hase
order or re3uisition "orm $ @/A re#eiving, ins&e#ting $ reordering goods re#eived to ensure /oth
3uantity $ 3uaity. It is aso #aed as setu& #ost.
Inventory Management APEX AUTO LTD.,
1A Carr'#ng Cot;
The se#ond /road #ategory o" #osts asso#iated !ith inventory is the #arrying #osts. They are
invoved in maintaining or #arrying inventory. The #ost o" hoding inventory may /e divided
into t!o #ategories.
0. Thoe that Ar#e ,%e to the Stor#ng of In$entor'; The main #om&onents o" this
#ategory o" #arrying #osts are @iA storage #ost, that is, de&re#iation, insuran#e,
maintenan#e o" the /uiding and utiities6 @iiA insuran#e o" inventory against "ire and the"t6
@iiiA deterioration in inventory /e#ause o" &i"erage, "ire, te#hni#a o/soes#en#e, stye
o/soes#en#e and &ri#e de#ine6 @ivA serving #osts, su#h as a/our "or handing inventory,
#eri#a and a##ounting #osts.
1. The Opport%n#t' Cot of /%n&; This #onsists o" e%&enses in raising "unds @interest on
#a&itaA to "inan#e the a#3uisition o" inventory. I" "unds !ere not o#-ed u& in inventory,
they !oud have earned a return. This is the o&&ortunity #ost o" "unds or the "inan#ia
#ost #om&onent o" the #ost.
-#nI#ng of Cot bae& an& .h'#!al (ae& In$entor' Management*
The #arrying #osts and the inventory si>e are &ositivey reated and move in the same
dire#tion. I" the eve o" inventory in#reases, the #arrying #osts aso in#rease and vi#e<versa.
Total Cot;
The sum o" inventory in#reases, the #arrying #osts re&resent the tota #ost o" inventory.
This is #om&ared !ith the /ene"its arising out o" inventory to determine the o&timum eve o"
inventory.
E!onom#! Or&er A%ant#t' ;EOA>;
Inventory Management APEX AUTO LTD.,
)o! mu#h inventory shoud /e /ought in a otM (houd the 3uantity to /e &ur#hased /e
arge or smaM (houd the re3uirements o" materia during a given &eriod @say H months or 0
yearA /e a#3uired in one ot or shoud it /e a#3uired in instaments or in severa sma otsM
(u#h inventory &ro/ems are #aed Order 3uantity &ro/ems.
There"ore EOL is that eve o" inventory at !hi#h tota #ost o" inventory #om&rising
ordering #ost $ #arrying #osts is the minimum
/orm%lae for !al!%lat#ng E!onom#! Or&er A%ant#t';
EOL P 1AO
C
=here,
AP Annua Luantity
OP Ordering Cost
CP Carrying Cost
A%mpt#on;
Inventory Management APEX AUTO LTD.,
01 The "irm -no!s !ith #ertainty the annua usage @#onsum&tionA o" a &arti#uar item o"
inventory.
21 The rate at !hi#h the "irm uses inventory is steady over time.
41 The orders &a#ed to re&enish inventory sto#-s are re#eived at e%a#ty that &oint in
time !hen inventories rea#h >ero.
Or&er .o#nt;
Reor&er .o#nt;
This is the &oint at !hi#h to order inventory<e%&ressed e3uation<ay as;
Lead Time in days X daiy usage.
-ea& T#me;
It is the time normay ta-en in re#eiving deivery a"ter &a#ing orders !ith su&&iers.
Safet' Sto!I;
It im&ies e%tra inventories that #an /e dra!n do!n !hen a#tua ead<time andNor usage
rates are greater than e%&e#ted.
2A (ae& on /#nan!#al Statement
+or having assistan#e /y /an-s, /an-ers shoud "irst evauate the "oo!ings;
0. Coatera (trength.
Inventory Management APEX AUTO LTD.,
21 In$entor' .o#t#on
41 Some /#nan!#al Rat#o
4. Payment o" a re3uirements i-e In#ome Ta%, =eath Ta%, Interests on de/t et#.,
:. Agreement &a&ers o" a authori>ed &ersons i-e De/enture hoders, (harehoders et#.,
H. A re3uired do#uments.
8. =ho is the 9uyer and his Country5s reationshi& et#,
The main re3uirement "or 9an-er is the +inan#ia (tatements o" 2 to : years. +rom this
statement it #an 'udge the "inan#ia strength o" the Com&any. =hie anay>ing o" +inan#ia
(trength o" the Com&any, Inventory is aso having its o!n em&hasis roe. 9e#ause i" #om&any is
having ess inventory than its re3uirement then #om&any !i get ess "inan#e "rom 9an-s and
visa<versa. (o here high inventory means, high in the sense #om&any shoud have su""i#ient
inventory a##ording to its order. Cot more than its order.
Let us have a oo- on some Inventory reated *atios and aso some im&ortant "inan#ia
ratios those, !hi#h are reated to Inventory. +rom evauating o" these +inan#ia *atios, #om&any
#an 'udge the sto#-sNgoods eve in Inventory, so that #om&any #an get oan "rom 9an-s.
The "inan#ia statement &rovides a summari>ed vie! o" the "inan#ia &osition and
o&erations o" a "irm. There"ore, mu#h #an /e earnt a/out a "irm "rom a #are"u e%amination o" its
"inan#ia statements as invaua/e do#umentsN&er"orman#e re&orts. The anaysis o" "inan#ia
statement is, thus an im&ortant aid to "inan#ia anaysis.
The anaysis o" "inan#ia statements is a &ro#ess o" evauating reationshi& /et!een
#om&onent &arts o" "inan#ia statements to o/tain a /etter understanding o" the "irm5s &osition
and &er"orman#e.
Tas-s o" +inan#ia anayst is to;
Inventory Management APEX AUTO LTD.,
0A (ee#t the in"ormation reevant to the de#ision under #onsideration "rom the tota
in"ormation #ontained in "inan#ia statement.
1A Arrange the in"ormation in !ay to highight signi"i#ant reationshi&s.
2A Inter&retation and dra!ing o" in"eren#es and #on#usions.
In /rie", "inan#ia anaysis is the &ro#ess o" see#tion, reation and evauation.
+inan#ia anaysis is the &ro#ess o" identi"ying the "inan#ia strengths and !ea-nesses o"
the "irm /y &ro&ery esta/ishing reationshi&s /et!een the items o" the /aan#e sheet and the
&ro"it and oss a##ount. +inan#ia anaysis #an /e under ta-en /y management o" the "irm, or /y
&arties out side the "irm, vi>., o!ners, #reditors, investors and others. The nature o" anaysis !i
di""er de&ending on the &ur&ose o" the anayst.
? Management o" the "irm !oud /e interested in every as&e#t o" the "inan#ia anaysis. It
is their overa res&onsi/iity to see that the resour#es o" the "irm are used most
e""e#tivey and e""i#ienty, and that the "irm5s "inan#ia #ondition is sound.
? Trader #reditors are interested in "irm5s a/iity to meet their #aims over a very short
&eriod o" time.
? Investors, !ho have invested their money in the "irm5s shares, are most #on#erned a/out
the "irm5s earnings.
? (u&&iers o" ong<terms de/t, on the other hand are #on#erned !ith the "irm5s ong<term
soven#y and surviva. They anay>e the "irm5s &ro"ita/iity over time, its a/iity to
generate #ash to /e a/e to &ay interest and re&ay &rin#i&a and the reationshi& /et!een
various sour#es o" "unds.
21Rat#o Anal'# relate& to In$entor'
*atio anaysis is a &o!er"u too o" "inan#ia anaysis. A ratio is de"ined as ,the indi#ated
3uotient o" t!o mathemati#a e%&ressions. and as ,the reationshi& /et!een t!o or more things..
In "inan#ia anaysis ratio is used as a /en#hmar- "or evauating the "inan#ia &osition and
Inventory Management APEX AUTO LTD.,
&er"orman#e o" a "irm. *atios he& to summari>e arge 3uantities o" "inan#ia data and to ma-e
3uaitative 'udgment a/out to "orm a 3uaitative 'udgment the "o#us o" "inan#ia anaysis is on the
-ey "igures in the "inan#ia statements and the signi"i#ant reationshi&s that e%ist /et!een them.
T'pe of Rat#o*
a. Li3uidity *atios
/. A#tivity *atios
#. Pro"ita/iity *atios
A. -#J%#&#t' Rat#o;
Li3uidity re"ers to the a/iity o" the "irm to meet its o/igations in the (hort run, usuay
one year. Li3uidity ratios measure the a/iity o" the "irm to meet its #urrent o/igations.
Li3uidity ratios /y esta/ishing a reationshi& /et!een #ash and other Current assets to Current
o/igations &rovide a 3ui#- measure o" i3uidity. A "irm shoud ensure that it does not su""er
"rom a#- o" i3uidity, and aso that it does not have e%#ess i3uidity.
There"ore it is ne#essary to stri-e a &ro&er /aan#e /et!een high i3uidity and a#- o"
i3uidity. +oo!ing are some o" the im&ortant i3uidity ratios;
0. Current *atio
1. Lui#- *atio
2. Cet !or-ing Ca&ita *atio
9. A!t#$#t' Rat#o;
Inventory Management APEX AUTO LTD.,
A#tivity ratios are #on#erned !ith measuring the e""i#ien#y in asset management.
(ometimes, these ratios are aso #aed e""i#ien#y ratios or asset utii>ation ratios. The e""i#ien#y
!ith !hi#h, assets are #onverted into saes. The greater the rate o" turnover or #onversion, is the
more e""i#ient the utii>ation. +or this reason, su#h ratios are aso designated as turnover ratios.
Turnover is the &rimary mode "or measuring the e%tent o" e""i#ient em&oyment o" assets /y
reating the assets to saes. An a#tivity ratio may, there"ore, /e de"ined as a test o" the
reationshi& /et!een saes and various assets o" a "irm. (evera a#tivity ratios #an /e #a#uated
to 'udge the e""e#tiveness o" asset utii>ation.
0. Inventory Turnover
1. Assets Turnover
2. +i%ed Assets and Current Assets Turnover
Aet Mea%rement for &#fferent metho& of #n$entor' $al%at#on;
/I/O Metho&;
Under this method, as noted earier, inventory is vaued on the assum&tion o"
#hronoogi#a #ost "o!. This im&ies that the unusedNunsod inventory #onsists o" the most
re#ent &ur#hases and, there"ore, #an /e assumed to /e vaued at #urrent #ost. The vae o"
inventory as sho! in the /aan#e sheet !oud re"e#t the current cost, i" +I+O method !ere used.
-I/O Metho&;
A##ording to this method, o/viousy, the inventory "igure !oud not a&&ear in the
/aan#e sheet at the Current Cost. It !i re"e#t rather the #ost o" ra! materias &ur#hased in the
&ast year. Assuming rising &ri#es, the inventory vaue /ased on the LI+O method !oud tend to
Inventory Management APEX AUTO LTD.,
/e undervalued. +or e%am&e inventory &ur#hased as eary as si% years or more. In that
situation, the inventory "igure in#uded in the /aan#e sheet !oud /e a#tuay the &ri#e &aid on
the &ur#hase o" inventory si% years ago. In a &eriod o" rising &ri#es, this vaue !oud naturay
/e grossy out o" ine !ith the #urrenty &revaiing &ri#e. This !oud im&y that the /aan#e
sheet !oud not re"e#t the #urrent !orth o" the inventory. That the inventory vaue !i not /e
#orre#t is another !ay o" saying that the /aan#e sheet !i &resent a distorted &i#ture o" the
a""airs o" the "irms.
A &ossi/e soution to #orre#t the a/ove distortion in the /aan#e sheet im&i#it in the
under<vauation o" inventory !ith the LI+O method is a modi"iedNad'usted LI+O method.
The modi"ied method !i, thus, serve the needs o" #orre#t in#ome determination as !e
as #orre#t asset measurement. )o!ever, this is su/'e#t to a 3uai"i#ation, namey, the #urrent
year5s &ur#hase @unitsA shoud e%#eed the #urrent year5s #onsum&tion @unitsA. I" "or reasons su#h
as stri-eNo#-outs, trans&ortation &ro/ems, and so on, the #urrent #onsum&tion e%#eeds the
#urrent &ur#hases, &ro"its !i rise. The in#rease !i de&end u&on the e%tent o" i3uidation o"
the &revious years5 inventory. This in#rease in &ro"it is termed as i3uidation &ro"it, !hi#h is
e3ua to the di""eren#e /et!een the #urrent #ost o" inventory and the #ost o" inventory &ur#hased
in the &ast.
Inventory Management APEX AUTO LTD.,
-og#t#! In$entor' Management
Mean#ng of -og#t#!;
Logisti#s is the Organi>ation o" (ervi#es and (u&&ies. In other !ords, ogisti#s is
ma-ing and ta-ing the &ermission "or seNe%&orting the #om&any5s &rodu#ts in "oreign #ountries.
In "uy e%&ort<oriented /usiness this is one o" the main de&artment, !here this
de&artment gets an a&&rova to se their goods in "oreign #ountries. And aso their main
intention is to maintain a do#uments o" those that are reated to the e%&orting o" their &rodu#ts.
-og#t#! In$entor' Management;
Des, aready !e have o/served a/out the meaning o" Inventory Management in the
Organi>ation. 9ut in "uy e%&ort oriented /usiness6 Inventory Management is a very im&ortant
#on#e&t. 9e#ause every e%&orter or im&orter, they do not -no! a/out ea#h other !ho are staying
in other #ountries.
Inventory Management APEX AUTO LTD.,
(o every #om&any, !hi#h are e%&orting or im&orting o" materias, they shoud
#ommuni#ate ea#h other through /an-s ony. These /an-s are isted /y Centra 9an- o" that
Cation. In our Country *9I is ists some /an-s "or intermediating &ur&ose and every year *9I
de#are some isted 9an-s as a mediator.
+or &rodu#ing o" materias and seing o" those materias, every #om&anyN/usiness shoud
need a =or-ing Ca&ita. This =or-ing Ca&ita #an aso "inan#ed /y 9an-s. =hie in e%&ort
oriented /usiness it is sighty di""erent tas-. )ere 9an-s #an a#ts as "inan#ia assistan#e "or Pre<
(hi&ment and "or Post (hi&ment o" Goods.
+or having an assistan#e /y /an-s they shoud "irst evauate "oo!ings;
0. Coatera (trength.
1. Inventory Position
2. (ome +inan#ia *atios
4. Payment o" a re3uirements i-e In#ome Ta%, =eath Ta%, Interest et#.,
:. Agreement &a&ers o" a authori>ed &ersons i-e De/entures, (harehoders et#.,
H. A re3uired do#uments.
8. =ho is the 9uyer and his Country5s reationshi& et#,
9e"ore going to detai de#ision on 9an-s et us have a oo- on Commer#ia Pa&ers. =hi#h are
aso &arts o" "inan#ing the !or-ing #a&ita re3uirements o" the Com&anies.
Commer!#al .aper @CPsA;
In the re#ent &ast, Commer#ia Pa&ers @CPsA have /e#ome one o" the /est methods "or
"inan#ing the !or-ing #a&ita re3uirements o" the #om&anies.
The #om&anies trying to raise the "unds /y issuing the CP are reguated /y Guideines "or
issue o" Commeri#a Pa&ers @CPA, 1777 issued /y *eserve 9an- o" India on O#to/er 07, 1777.
Inventory Management APEX AUTO LTD.,
These guideines a&&y to the #om&anies trying to raise the "unds /y issuing the CPs. As &er
these guideines, a a #om&any means a #om&any as de"ined in se#tion 4:<I@aaA o" *eserve 9an-
o" India A#t, 0G24. (e#tion 4:<I@aaA o" *eserve 9an- A#t, 0G24 de"ines a #om&any as the
#om&any as the #om&any as de"ined in se#tion 2 o" the #om&anies A#t, 0G:H.
In the Indian #ir#umstan#es, /an-s &ay a very ma'or roe in "inan#ing the !or-ing #a&ita
re3uirement o" the organi>ations. =e !i #onsider the /an- as a sour#e "or "inan#ing the
!or-ing #a&ita re3uirement o" the organi>ations under the "oo!ing heads;
Amo%nt of A#tan!e
To o/tain the /an- #redit "or "inan#ing the !or-ing #a&ita re3uirements, the #om&any is
re3uired to estimate the !or-ing #a&ita re3uirement &ro&ery. To estimate the re3uirement o"
!or-ing #a&ita re3uirement &ro&ery, the #om&any !i /e re3uired to estimate its eve o"
#urrent assets and #urrent ia/iities &ro&ery, as !or-ing #a&ita is the di""eren#e /et!een #urrent
assets and #urrent ia/iities.
+or this, the te#hni3ues i-e ratio anaysis, trend anaysis et#., #an /e used /y the
#om&any. More a##urate the estimation o" the eve o" #urrent assets and #urrent ia/iities, more
a##urate the estimation o" eve o" #urrent #a&ita. Then, the #om&any !i have to a&&roa#h the
/an- aong !ith the ne#essary su&&orting data. On the /asis o" estimates su/mitted /y the
#om&any, the /an- may de#ide the amount o" assistan#e that #an /e e%tended. =hie e%tending
the !or-ing #a&ita assistan#e, the /an- may &res#ri/e the margin money re3uirement. The
margin money sti&uation is made /y the /an-s in order to ensure that /orro!ing #om&any5s o!n
sta-e in the /usiness and aso to &rovide the #ushion against the &ossi/e redu#tion in the vaue
o" se#urity o""ered to the /an-. The &er#entage o" margin money sti&uation may de&end u&on
the #redit standing o" the /orro!ing #om&any, "u#tuations in the &ri#e o" se#urity and the
Inventory Management APEX AUTO LTD.,
dire#tives o" *9I "rom time to time. The genera &rin#i&e a&&i#a/e !i /e, ,more di#ey the
nature o" se#urity, higher o" se#urity, higher !i /e the margin money sti&uations..
/orm of A#tan!e;
A"ter de#iding the amount o" overa assistan#e to /e e%tended to the #om&any, the /an- #an
dis/urse the amount in any o" the "oo!ing "orms;
0. Con<+und 9ased Lending
1. +und 9ased Lending.
Non /%n& (ae& -en&#ng;
In #ase o" Con<+und 9ased Lending, the ending /an- does not #ommit any &hysi#a out"o! o"
"unds. As su#h, the "unds &osition o" the ending /an- remains inta#t. The Con<+und 9ased
Lending #an /e made /y the /an-s in t!o "orms;
a. 9an- Guarantees
/. Letter o" Credit
/%n& (ae& -en&#ng;
Inventory Management APEX AUTO LTD.,
In #ase o" Con<+und 9ased Lending, the ending /an- #ommits the &hysi#a out"o! o" "unds.
As su#h, the "unds &osition o" the ending does not a""e#ted. The +und 9ased Lending #an /e
made /y the /an-s in "oo!ing "orms;
a. Loan
/. Overdra"t
#. Cash Credit
d. 9is Pur#hasedNDis#ounted
e. =or-ing Ca&ita Term Loans
". Pa#-ing Credit
Se!%r#t' for A#tan!e;
The /an- may &rovide the assistan#e in any o" the modes as stated a/ove. 9ut normay no
assistan#e !i /e avaia/e uness the #om&any o""ers some se#urity in any o" the "oo!ing
"orms.
0A )y&othe#ation.
1A Pedge
2A Lien
4A Mortgage
Inventory Management APEX AUTO LTD.,
.ro!e of .h'#!al In$entor' Ma#ntenan!e #n Ape: A%to -t&
Ea#h unit o" A&e% auto td has its o!n store de&artment that !e #an #a it as 3orIC#nC
pro!e #n$entor'.
This inventory &ro#ess is "uy #om&uteri>ed and here &a&er !or- is very ess. Ony
maintaining o" do#uments, !hi#h !ere sent /y su&&iers as i-e #haans et#., are ony here to
maintain as &a&er do#uments. Other!ise it is "uy #om&uteri>ed. Through #om&uters ony (tore
De&artment re#eives Pur#hase Order and /y #om&uter ony they send do#uments o" issuing o"
materias to manu"a#turing unit.
+or easy to #ommuni#ate and &anning o" &rodu#tion a#tivity, A&e% Auto Ltd Unit II has
having ony one Godo!n in Pro#edures invoved in re#eiving and issuing o" materias are as
"oo!s;
0A Godo!n !i "irst get Pur#hase Order Co..
.%r!hae Or&er N%mber*
Inventory Management APEX AUTO LTD.,
This PO is #omes "rom Pur#hase De&artment. This Pur#hase De&artment gives a num/er
"or the ea#h order made /y Pur#hase De&artment ony.
9e"ore &a#ing any order to su&&iers they "irst #he#-s the materias in inventory as to
-no! a/out !hether materias are avaia/e in Inventory or not. I" not avaia/e in Inventory
then ony they !i &a#e an order a##ording to the re3uirement.
In A&e% Auto Ltd @Unit IIA, it is very im&ortant to note that; &ur#hase de&artment a!ays
&a#es an order to those materias !hi#h have ordered /y CustomersN/uyers o" A&e% Auto Ltd
@Unit IIA.
(o, normay it does not have any sto#-s in its inventory. +or every order "rom #ustomers
they ma-e a "resh Pur#hase Order "or &ur#hasing o" materias. It means !hatever the materias
are re3uiring "or &resent orders, those materias are ony they -e&t as sto#-s in Inventory.
In some #ases, materias may /e in Godo!n, !hi#h they #a it as “(%ffer Sto!I”1 I"
these od sto#- is mat#hes the re3uirements o" &rodu#t !hi#h has ordered no! /y its #ustomers,
then &ur#hase De&artment !i sent a noti#e to Inventory "or issuing o" those materias. These
od sto#- may /e in "orm o" *a! Materia or in "orm o" "inished goods. A&e% Auto Ltd @Unit IIA
a!ays &rodu#es more than its re3uirements. +or e%am&e i" Te#on has ordered "or 17 EX< 87
/oom then A&e% &rodu#es 1: EX S 87 i.e., 17K more than its re3uirements. (o the remaining or
e%#esses materia they #a it as “(%ffer Sto!I”1
1A *e#eiving o" Materias
Any materias #omes<in or goes<out "rom the Godo!n it shoud /e enter in the Gate that
is they #a it as ,Gate Entr'., !hi#h is maintained /y se#urity Guard. Guard is not an
em&oyee o" an organi>ation. )e is a #onta#t</ased em&oyee.
Inventory Management APEX AUTO LTD.,
=hen Inventory re#eives materias it "irst ins&e#ts some sam&es, so "or it, they #a u& as
,Spot Inpe!t#on.. )ere they ins&e#t the "oo!ing &oints;
aA Is it our su&&ier ony and is this &ar#e is "or us onyM
d. Are these re#eived materias a##ording to the Pur#hase OrderM Li-e
i. Luantity
ii. Date, et#.,
e. Is it having a re3uired Chaans or Invoi#es and aso does it a&&roved /y authori>ed
&ersonM
". Is it having a re3uired do#uments i-e O#troi et#.,
g. Is that Chaan #onsisting the #orre#t in"ormation o" materiasM
A"ter a&&rova o" materias /y sam&e ins&e#tion, inventory de&artment &ut these detais
in manua /oo-, this do#umentation is #aed as ,,a' (ooI.. This day/oo- is #onsisting o"
in"ormation i-e Chaan Co., P.O. Co., (tye Co., Des#ri&tion o" Materias, (u&&ier5s Came,
trans&orter5s Came, and Luantity.
A"ter #om&eting o" these &ro#esses, materias !i send to ins&e#tion de&artment. In this
ins&e#tion de&artment they ins&e#t in<detais o" materias. A"ter a&&rova /y ins&e#tion
de&artment, this inventory de&artment ma-es one do#ument, !hi#h is they #a it as ,Goo&
Re!e#$e& ,o!%ment..
This Goods *e#eived Do#ument is #onsisting o" G* Co., Date, G*C Ty&e @In<storeA,
Mode o" Trans&ort, Chaan Co., Chaan Date, (tatus, Gate Entry Co., Gate Entry Date, Priority
Co., a Detais o" Materias and re#eived 3uantity and a#tua 3uantity aso enters there.
2. Issuing o" Materias
Inventory Management APEX AUTO LTD.,
Mer#handising De&artment !i send one #ard #aed ,)ob Car&. !hi#h it #onsisting o"
a detais o" materias re3uires to &rodu#e a &rodu#t. A##ording to that Card Inventory
de&artment shoud send the materias to manu"a#turing de&artment.
A"ter re#eiving o" materias /y manu"a#turing de&artment "rom inventory de&artment
they issue one do#ument a/out re#eived o" materias, 3uantity, des#ri&tion o" materias et#.
Manu"a#turing De&artment uses these materias "or manu"a#turing &ur&ose. In manu"a#turing
&ro#ess sometimes it may ha&&ens i-e some materias get damages and some are not "uy
mat#hes !ith re3uirements. Then those materias !i /e return to inventory.
A"ter utii>ing o" a these materias /y manu"a#turing de&artment they !i send one
do#ument #aed ,Or&er Complet#on Report. @OC*A. This re&ort #onsists the in"ormation o"
Per#entage o" Utii>ed Materias "or &arti#uar order and &er#entage o" !astage o" materias.
This re&ort !i send to inventory and aso to Mer#handising De&artment.
4. *eturn 9a#- Materias "rom Manu"a#turing Units;
Inventory ta-es those materias, !hi#h are return /a#- "rom manu"a#turing units /e#ause
o" e%#ess or sur&us o##urs !hie manu"a#turing o" &rodu#ts. This e%#ess or sur&us e%ists
/e#ause o" &ur#hase de&artment, they a!ays orders 17K more than its re3uirement to meet the
re3uirement o" ne%t month. (o these materias are -e&t in Inventory as name it as ,(%ffer
to!I..
These 9u""er (to#-s !i /e utii>e !hen #om&any get the same ty&e o" Order. Inventory
issues these materias @9u""er (to#-A ony !hen it re#eives instru#tion "rom Mer#handising and
&ur#hasing De&artment.
:. *e'e#ted Materias;
Inventory Management APEX AUTO LTD.,
Ins&e#tion de&artment ma-e the re'e#tion o" materias, !hen materias are not as &er
re3uirements and not as &er the order. These re'e#ted materias are -e&t in se&arate se#tion /y
Inventory De&artment.
Inventory de&artment in"orm to Pur#hase De&artment and aso noti#e to (u&&iers a/out
re'e#tion o" materias. That is #aed ,Re"e!t#on Car&.. In this #ard it invoves Came o"
(u&&ier, Des#ri&tion o" Materias, Chaan Co., Chaan Date, Gate Entry Co. $ Date, Co. o"
Luantity re'e#ted, *eason "or re'e#tion et#.,
(ome times su&&ier may issue ne! materias in &a#e o" re'e#ted materias. Or he may
give some #om&ensation "or !rong su&&y and that is a"ter &aying o" "u &ayment o" materias.
Se!t#on #n In$entor';
Inventory is again divided into : se#tions. Ea#h is se#tion handing /y ony one &ersons,
!ith the he& o" 2 to 4 assistants, !ho he&s in maintaining o" materias at s&e#i"i# area. +ive
se#tions are as "oo!s;
Se!t#on #n In$entor'
,2E0
A /ought out items are /een stored here and &ro#essed to the manu"a#turing as !hen re3uired
,2E2
A #onsuma/es and toos and maintenan#e a##essories are /een stored in this se#tion
,2E4
A ra! materias i-e dire#t, semi "inished goods are stored in this se#tion and &ro#essed to the
manu"a#turing as !hen re3uired and od sto#- and re'e#ted items are aso stored in this se#tion.
,2E5
Gas tan- and #yinders is stored in this se#tion.
,2E6
Inventory Management APEX AUTO LTD.,
A "inished goods are stored in this se#tion
.%r!ha#ng .ro!e&%re of Mater#al
In A&e% they &ur#hase materias at "rom a muti&e (u&&iers. There is a reason "or
&ur#hase materias "rom muti&e su&&iers. The reason is i" one su&&ier deays to "u"i the
su&&y then there must /e aternative su&&ier "or it to "u"i the re3uirement. (o there must me
no sto#- outs in the &rodu#tion &ro#ess
A&e% a!ays &ur#hases at /u- /ut /y s#hedue !ise. In other !ords they &ur#hase
materias at a time "or s&e#i"i# order. They ma-e the agreement o" su&&ying materias ony at
on#e. And they negotiate the &ri#e ony at on#e that is /e"ore su&&ying o" materias and on#e
their agreement is over then they &rovide s#hedue to su&&ier to su&&y the materias at a
s&e#i"i# time and at a s&e#i"ied 3uantity.
(o it redu#es the s&a#es, !hi#h o##u&ies in the Godo!n. (o this method is suita/e "or
this ty&e o" industry /e#ause o" same orders "rom #ustomers.
Inventory Management APEX AUTO LTD.,
3I. Store
Co! !e #ome to the =IP (tore. As !e have aready seen that this A&e% is having ony
one Godo!n and every unit is having its o!n (tore De&artments. As !e -no! that =or- In
Pro#ess (tore means (emi<"inished Goods, here goods are not #om&eted yet and not these are in
"uy ra! materias "orm.
(o in vauation matter it is having sighty di""erent !ay. And in A&e% it is as "oo!s;
Des, these goods are in#udes some a/our #ost, some other #osts. (o in vauation o" =IP they
vauate at *a! Materia Pri#e o" that goods PLU( in#urred #ost to &rodu#e ti no!.
/#n#he& Goo&
Bauation o" +inished Goods in A&e% is at 07K ess than (eing Pri#e o" those "inished
goods. +inished Goods are in the sense these goods shoud /e ready to dis&at#h.
There is no se&arate Godo!n "or +inished GoodsNProdu#ts. Every unit is having it5s o!n
+inished Goods Godo!n. In that Godo!n ony they store these Goods. And dis&at#hing o"
these &rodu#ts is dire#ty /y ea#h unit. They do not #onsoidate these goods6 they dis&at#h these
"inished &rodu#ts dire#ty /y ea#h unit.
A&e% auto td @Unit IIA has ony one #ustomer that is Te#on. (o they dire#ty su&&y
"inished &rodu#ts to its #ustomers. (o it is not ne#essary to have another Godo!n "or +inished
Goods.
Inventory Management APEX AUTO LTD.,
-og#t#! In$entor' Management
There is a de&artment #aed Logisti# De&artment in A&e% Auto Ltd, !hi#h is #on#erning
a/out seing o" goods and maintaining o" a do#uments reated to e%&orting o" &rodu#ts and aso
ta-ing the &ermission "rom /an-s to se s&e#i"i# &rodu#ts in s&e#i"i# #ountries. (o Logisti#
De&artment is one o" the im&ortant "ront<o""i#e De&artments, i-e Mar-eting De&artment.
Mar-eting De&artment is one, !hi#h ta-es the orders "rom its #ustomers. And this is
entirey di""erent "rom Logisti# De&artment. Logisti# De&artment is one, !hi#h ses its &rodu#ts
and maintains a do#uments. 9ut Mar-eting De&artment is #omes into &i#ture /e"ore &rodu#tion
&ro#ess starts. And Logisti# De&artment #omes into &i#ture ony a"ter the &rodu#tion &ro#ess
#om&etes.
Logisti# De&artment is not ony ta-ing the a&&rova "or seing its &rodu#ts, /ut aso it
!i #on#ern "or ta-ing oan "or its !or-ing #a&ita. 9an-s !i &rovide these !or-ing #a&ita
Inventory Management APEX AUTO LTD.,
re3uirements in t!o senses; one is on Pre<(hi&ment Loan and another one is Post<(hi&ment
Loan.
There are so many !ays to get oan "or !or-ing #a&ita re3uirement. A&e% get oan "or
=or-ing Ca&ita re3uirement either through Commer#ia Pa&ers or through Letter o" Credit.
A&e% is ta-ing oan "or =or-ing Ca&ita *e3uirements "rom A%is 9an-.
3ho !an #%e the C.;
A #om&any !i /e eigi/e to issue the CP &rovided;
0. the tangi/e net !orth o" the #om&any as &er atest audited /aan#e sheet is not ess than
*s. 4 Crores.
Note:
Tangi/e net !orth means share #a&ita &us "ree reserves duy redu#ed /y intangi/e
assets i-e a##umuated osses, de"erred revenue e%&enditure et#. +ree *eserves in#ude share
&remium and de/enture redem&tion reserve /ut do not in#ude revauation reserve.
1. Com&any has /een san#tioned !or-ing #a&ita imits /y /an-s.
2. 9orro!ed amount o" #om&any is #assi"ied as a standard asset /y the /an-.
Commer#ia Pa&er is an unse#ured &romissory note issued at a dis#ount. The rate o"
dis#ount is re3uired to /e de#ided /y the issuer and is not reguated.
9e"ore the #om&any issues the CPs it is re3uired to o/tain satis"a#tory #redit rating "rom
an a&&roved #redit rating agen#y. Presenty, "oo!ing #redit rating agen#ies have /een
a&&roving /y *9I "or this &ur&ose.
a. Credit *ating In"ormation (ervi#es o" India Ltd., @C*I(ILA
Inventory Management APEX AUTO LTD.,
/. Investment In"ormation and Credit *ating Agen#y o" India Ltd., @IC*AA
#. Credit Anaysis and *esear#h Ltd., @CA*EA
d. +ITC) *ating India @PA Ltd.,
The minimum #redit rating re3uired is P<1 o" C*I(IL. I" the rating is given /y any other
agen#y, e3uivaent minimum rating !i /e re3uired. The rating so o/tained /y the #om&any
shoud /e #urrent and shoud not have "aen due "or revie!.
3ho !an #n$et #n C.;
+oo!ing &ersons #an invest in the CP
4. Individuas
:. 9an-s
H. Cor&orate 9odies in#or&orated in India
8. Unin#or&orated 9odies
F. Con<resident Indians
G. +oreign Institutiona Investors
Nat%re of a C.;
h. A CP #an /e issued "or the maturity &eriod o" 8 days to one year.
i. A CP has the denomination o" *s. : La-shs and every singe investor shoud invest
minimum *s. : La-hs in CP.
'. Every issue o" CP, in#uding the rene!a, !i /e #onsidered to /e the "resh issue.
-. The amount o" CP sha /e !ithin the overa imit san#tioned /y the 9oard o" Dire#tors. It
#an /e issued a ,stand aone. &rodu#t. 9an-s !i /e "ree to ad'ust the !or-ing #a&ita
imits a"ter #onsidering the CPs issued /y the Com&any.
Inventory Management APEX AUTO LTD.,
It !i not /e out o" &a#e to mention here that CP is not treated as de&osit as &er the &rovisions
o" Se!t#on 6BCA of the Compan#e A!t= 0D67.
.ro!e&%re for #%#ng the C.;
Every #om&any issuing the CP shoud a&&oint a s#hedued /an- as the Issuing and
Paying Agent @IPAA. It !i satis"y it<se" that #om&any has o/tained satis"a#tory #redit rating. It
sha aso veri"y the do#uments su/mitted /y the issuing #om&any and issue a #erti"i#ate that the
do#uments are in order. IPA shoud aso #erti"y that it has vaid agreements !ith the issuing
#om&any.
The issuing #om&any sha arrange to &a#e the CPs on &rivate &a#ement /asis !ith the
inventors. The issuing #om&any sha dis#ose to the &otentia investor its "inan#ia &osition.
A"ter the dea is #on"irmed, the issuing #om&any sha issue &hysi#a #erti"i#ates to the investor.
Investors sha /e given a #o&y o" IPA #erti"i#ate to the e""e#t that the issuing #om&any has a
vaid agreement !ith the IPA and do#uments are in order. Every issue o" CP shoud /e re&orted
to *9I through the IPA !ithin three days "rom the date o" #om&etion o" issue.
A&e% Auto Ltd @Unit IIA has setu& in Te#on Premises so as !e -no! earier that A&e%
Unit II is having ony one #ustomer that is Te#on so "or short distan#e there is no need o" ogisti#
de&artment in A&e% Unit II it is handed /y Pur#hase de&artment in#harge is Parmod (ingh.
Inventory Management APEX AUTO LTD.,
/#nan!#al In$entor' Management
Aready !e sa! a/out Logisti# Inventory Management. Let us see ho! A&e% vauates
the od and re'e#ted sto#-s in "inan#ia terms and aso have a oo- on the inventory ratios.
Val%at#on metho& for Ol& an& Re"e!te& Sto!I;
Ol& Sto!I;
This od sto#- means e%#ess o" materias "rom s&e#i"i# order. As aready vie!ed in
Physi#a Inventory Pro#ess that, a!ays &ur#hase de&artment &ur#hases 17K more than its
order. (o that remained or e%#ess materias are said to /e ,9u""er (to#-.
These Od sto#- are in the "orm o" *a! Materias then vauate it a##ording to &ur#hasing
o" those materias. I" these od sto#- are a"ter +inishing o" &rodu#tion &ro#ess. Then these are
vauating on seing &ri#e o" same &rodu#ts to the #ustomer.
Inventory Management APEX AUTO LTD.,
In easy !ords it #an /e said that i" materias are *a!, then ta-ing as Pur#hasing vaue "or
vauation &ur&ose. I" materias are +inished Goods then ta-ing (eing Pri#e as a vaue "or
vauation o" Od (to#- in Godo!n.
Re"e!te& Sto!I;
Again these are divides into three &arts. *e'e#tion o" *a! Materias i.e., /e"ore sending
to Produ#tion Pro#ess. *e'e#tion o" Materias during the Produ#tion Pro#ess and *e'e#tion o"
Materias a"ter the Produ#tion Pro#ess that is, *e'e#tion o" +inished Goods.
*e'e#tion o" *a! Materias is vauating on Pur#hase vaue o" those materias. *e'e#tion
o" =IP Materias then vauate as Pur#hase Baue .l% its &arty in#urred Costs i-e La/our,
Overhead Costs et#., And "or *e'e#tion o" +inished Goods vauate at Pur#hase Baue and +uy
in#urred Costs as said no!.
+ol&#ng or Or&er#ng Cot
These #osts are every im&ortant in manu"a#turing #om&anies to minimi>e the #ost. This
is not a&&i#a/e to A&e% /y virtue o" its 9usiness a#tivities. 9e#ause, et us have a /road vie! on
statement /y "oo!ing &oints;
? In A&e%, they &ur#hase the materias ony "rom muti&e su&&ier.
? 9e#ause to "u"i the re3uirements in re3uired time imit.
? A&e% orders the materias to su&&iers ony at on#e and a##ording to the s#hedue su&&ier
!i su&&y the materias.
Des, De&ending on (horter order #y#e A&e% #an hod entire sto#- !e /e"ore order starts
and aso A&e% #an have a "u sto#- at a time /e"ore starting &ro#ess o" &rodu#t o" that s&e#i"i#
order.
Inventory Management APEX AUTO LTD.,
EOA
EOL a&&i#a/iity due to the nature o" 9usiness as a/ove said is not &ossi/e.
Reor&er .o#nt;
This is the &oint is aso not having mu#h im&ortan#e /e#ause o" nature o" 9usiness.
-ea& T#me
A&e% &ur#hases materias "rom muti&e su&&ier and /y on s#hedue /asis to su&&y
materias. (o this is aso not a&&i#a/e in this ty&e o" /usiness.
Inventory Management APEX AUTO LTD.,
/#nan!#al Rat#o relate& to In$entor'1
RaG mater#al t%rno$er rat#o;
*a! materia turnover ratio is veo#ity at !hi#h ra! materia #onverted into goods ready
"or sae. I" ra! materia turnover ratio is high then #om&any is e""i#ien#y #onverting into "inished
goods.
+ormua; Materia #onsumed K Average ra! materia
Raw Material Turnover Ratio
Year Raw material consumed (Rs) Avg R.M Ratio
2008 576!8!"22 5#608082 $0.75
2007 #7$22#87# #6$#7266 $0.27
2006 2#077"2#6 $#2002!"0 $.7!
Inventory Management APEX AUTO LTD.,
+orm a/ove gra&h !e #ome -no! that ra! materia turnover ratio is in#reased ra&idy in 1778
"rom 0.84 in 177H to 07.18 "or 1778. Indi#ates that #om&any is #onverting ra! materia into
"inished or semi "inished goods very 3ui#-y
+ol&#ng per#o& of raG mater#al*
It re"ers to the num/er o" days ta-en "or the &rodu#tion unit to #onvert ra!
materia to "inish goods.
+ormua; 2H7 N*a! materia turnover ratio
Ratio
0
2
!
6
8
$0
$2
2008 2007 2006
Years
Ratio
)oding &eriod o" ra! materia
Dear Tota Days *atio Days
177F 2H7 07.8: 22
1778 2H7 07.18 2:
177H 2H7 0.84 17H
Inventory Management APEX AUTO LTD.,
As the ra! materia turnover ratio is in#reasing "orm to 07.18 "or 1778 it indi#ates that "irm is
ta-ing ess days "or #onversion as #om&ared to 177H. In 177H #onversion &eriod !as 17H days
/ut in de#reased to 2: days "or 1778. This is sho!n in a/ove gra&h.
9e"ore 1778 there !as no &rodu#tion &ro#ess they !ere #onverting semi "inished goods
into "inished &rodu#ts hen#e to start their o!n &rodu#tion &ro#ess they hod the ra! materia in
177H
3orI #n .ro!e T%rno$er rat#o*
=or- in &ro#ess turnover ratio is veo#ity at !hi#h =.I.P #onverted into goods ready "or
sae. I" =.I.P turnover ratio is high then #om&any is e""i#ien#y #onverting into "inished goods.
+ormua;
Cost o" &rodu#tion
Average =.I.P
=.I.P turnover ratio
Dear Cost o" &rodu#tion Avg =.I.P *atio
177F F4G,7:4,441 2H,817,871 12.01
1778 :::,7G4,:77 0:,707,248 2H.GF
Raw material holding Period
0
50
$00
$50
200
250
2008 2007 2006
Years
DAYS
R%&
Inventory Management APEX AUTO LTD.,
177H 2H0,007,0G8 G,8::,F2G 28.70
+orm a/ove gra&h !e #ame to -no! that =or- in &ro#ess turnover ratio is de#reasing "rom 28.70
in 177H to 12.01 177F. The ratio !as high in 177H as #om&ared to 1778 and 177F. The ratio !as
28.70. Indi#ates that #om&any is #onverting semi "inished into "inished goods 3ui#-y
+ol&#ng per#o& of 31I1.*
It re"ers to the num/er o" days ta-en "or the &rodu#tion unit to #onvert semi "inished
goods into "inish goods.
+ormua;
2H7
=.I.P turnover ratio
Work in Process Turnover ratio
0
5
$0
$5
20
25
#0
#5
!0
2008 2007 2006
Years
DAYS
Ratio
)oding &eriod o" =.I.P
Dear Tota Days *atio Days
177F 2H7 12.01 0:.:8
1778 2H7 2H.GF G.82
177H 2H7 28.70 G.81
Inventory Management APEX AUTO LTD.,
As the !or- in &ro#ess turnover ratio is in#reasing "orm G.81. in 177H To 0:.:8 "or 177F it
indi#ates that "irm is ta-ing ess days "or #onversion. =hi#h sho!n in a/ove gra&h
/#n#he& goo& t%rno$er rat#o*
+inished goods turnover ratio is veo#ity at !hi#h "inished goods #onverted into "or sae.
I" "inished goods turnover ratio is high then #om&any is e""i#ient.
+ormua;
Cost o" goods sod
Average "inished goods
Holding period of W I P
0
2
!
6
8
$0
$2
$!
$6
$8
2008 2007 2006
Years
DAYS
Ratio
+inished goods turnover ratio
Dear #ost o" goods sod Avg +.G *atio
177F F4G,7:4,441 1H,142,22G 21.2:
1778 :::,7G4,:77 0G,F:F,4F1 18.G:
177H 2H0,007,0G8 07,G47,77F 22.70
Inventory Management APEX AUTO LTD.,
+orm a/ove gra&h !e #ame -no! that "inished goods turnover ratio is de#reasing "rom 22.70 in
177H to 18.G: "or 1778. Indi#ates that #om&any is seing goods itte so!y as #om&ared to
177H /ut it is /it "ast as #om&ared to 177F. =here the ratio "or that &arti#uar &eriod !as 21.2:
de#reased to 00.17 "or 177F it is satis"a#tory. =hi#h sho!n in a/ove gra&h.
In$entor' to !ap#tal emplo'e&*
This ratio indi#ates the reationshi& /et!een the tota #a&itas em&oyed and inventories it
sho!s ho! mu#h #a&ita utii>ed to invest in the inventories other than the other assets. The
norma manu"a#turing "irms have o! ratio o" inventory tota #a&ita em&oyed in the
organi>ation.
+ormua; Inventory K Tota #a&ita em&oyed
inished !oods Turnover Ratio
25
26
27
28
2"
#0
#$
#2
##
#!
2008 2007 2006
Years
DAYS
Ratio
Inventory to #a&ita em&oyed
Dear Inventory
Tota #a&ita
em&oyed Per#entage
177F 0G8,4H:,7HG 270,442,10: H:.:7
1778 010,::F,777 04:,4G1,:GG F2.:4
177H H8,GG4,H12 GF,222,214 HG.04
Inventory Management APEX AUTO LTD.,
9y o/serving a/ove gra&h !e #an say that the "irm investing huge amount in inventories
#om&ared to other assets. It invested F2.:4K o" its #a&ita in inventory in 1778 !here as it
redu#ed to H:.:7K in 177F
In$entor' to !%rrent aet rat#o*
This ratio indi#ates the reationshi& /et!een the inventory and #urrent assets. It sho!s the
&er#entage o" inventory to #urrent assets, !hi#h he&s the organi>ations in de#iding the #urrent
assets &oi#y !hi#h aso a""e#t the i3uidity &osition o" the organi>ation.
+ormua; Inventory / Current assets
Inventory to #urrent asset ratio
Dear Inventory #urrent assets Per#entage
177F 0G8,4H:,7HG 220,204,:74 :G.H7
1778 010,::F,777 128,HF8,HF4 :0.04
177H H8,GG4,H12 008,711,H1: :F.07
Inventor" to capital emplo"ed
0
$0
20
#0
!0
50
60
70
80
"0
2008 2007 2006
Years
P#R$#%TA!#
'()
Inventory Management APEX AUTO LTD.,
The inventory to #urrent assets ratio in the year 177H !as :F.07K and it de#reased to :0.04K in
the year 1778 /ut again it in#reased to :G.H7K in 177F. It sho!s that the "irm investing :G.H7K
o" its investment is "or inventory ony.
In$entor' to total aet*
This ratio indi#ates the reationshi& /et!een the inventory and tota assets. The
signi"i#an#e o" this ratio is it re"e#ts the &ortion the inventory as a &er#entage o" the tota assets,
!hi#h he&s the management de#iding the utii>ation remaining resour#es &ro"ita/y, sin#e the
inventory !i o#- u& the huge "unds and redu#es the &ro"ita/iity o" the organi>ation
+ormua; Inventory N Tota assets
Inventory to tota assets
Dear Inventory Tota assets Per#entage
177F 0G8,4H:,7HG GG7,21G,7F8 0G.G2
1778 010,::F,777 :47,G0H,7FF 11.48
177H H8,GG4,H12 404,G70,124 0H.2F
Inventor" to current asset ratio
!6
!8
50
52
5!
56
58
60
62
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory Management APEX AUTO LTD.,
During the year 177H the rate o" inventory to tota assets !as 0H.2FK it in#reased to 11.48K in
1778. 9ut again it redu#ed to 0G.G2K in 177F. It indi#ates that "irm investing ony 0G.G2K in
inventory out o" tota assets.
In$entor' to GorI#ng !ap#tal*
This ratio indi#ates the reationshi& /et!een inventory to !or-ing #a&ita and it
aso indi#ates the amount to inventory tied u& in the !or-ing #a&ita and it aso sho!s the
e""i#ien#y o" inventory management.
+ormua; Inventory
=or-ing #a&ita
Inventor" to total assets
0
5
$0
$5
20
25
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory to !or-ing #a&ita
Dear Inventory =or-ing #a&ita Per#entage
177F 0G8,4H:,7HG 0GG,24:,012 GG.7:
1778 010,::F,777 04H,7G8,107 F2.17
177H H8,GG4,H12 4H,22F,188 04H.4:
Inventory Management APEX AUTO LTD.,
In the year the ratio !as 04H.4:K in 177H. It de#reased to F2.17K "or 1778 /ut it in#reased it to
GG.7:K in 177F. It indi#ates that "irm investing huge amount in inventory
/IN,INGS*
0. *a! materia turnover ratio is in#reased ra&idy in 1778 "rom 0.84 in 177H to 07.18 "or
1778.
21 As the ra! materia turnover ratio is in#reasing "orm to 07.18 "or 1778 it indi#ates that
"irm is ta-ing ess days "or #onversion as #om&ared to 177H.
2.=or- in &ro#ess turnover ratio is de#reasing "rom 28.70 in 177H to 12.01 177F. The ratio
!as high in 177H as #om&ared to 1778 and 177F.
4.As the !or- in &ro#ess turnover ratio is in#reasing "orm G.81. in 177H To 0:.:8 "or 177F
it indi#ates that "irm is ta-ing ess days "or #onversion
Inventor" to working capital
0
20
!0
60
80
$00
$20
$!0
$60
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory Management APEX AUTO LTD.,
:.+inished goods turnover ratio is de#reasing "rom 22.70 in 177H to 18.G: "or 1778.
Indi#ates that #om&any is seing goods itte so!y as #om&ared to 177H
/ut it is /it "ast as #om&ared to 177F.
H.Com&any is seing goods itte so!y as #om&ared to 177H /ut it is /it "ast as #om&ared
to 177F. =here the ratio "or that &arti#uar &eriod !as 21.2:
8.The inventory to #urrent assets ratio in the year 1778 !as :F.07K and it de#reased to
:0.04K in the year 177F /ut again it in#reased to :G.H7K in 177F. It sho!s that the "irm
investing :G.H7K o" its investment is "or inventory ony.
F.During the year 1778 the rate o" inventory to tota assets !as 0H.2FK it i#reased to
11.48K in 177F. 9ut again it redu#ed to 0G.G2K in 177G. It indi#ates that "irm investing
ony 0G.G2K in inventory out o" tota assets.
G.In the year the ratio !as 04H.4:K in 177H. It de#reased to F2.17K "or 1778 /ut it
in#reased it to GG.7:K in 177F. It indi#ates that "irm investing huge amount in inventory.
07.As the "inished goods turnover ratio is in#reasing "orm 07.F8 in 1778 to 01.FH "or 177F
it indi#ates that "irm is ta-ing ess days "or sae. In 177F #onversion &eriod !as 01.FH days
/ut in de#reased to 00.17 "or 177F it is satis"a#tory.
Inventory Management APEX AUTO LTD.,
SUGGESTIONS*
a> +rom the "indings it is #ame to -no! that in the year 177H the num/er o" days "or
hoding *a! materia is more, it is not good "or the #om&any /e#ause it eats
unne#essary investment. To avoid this &ro/em the "oo!ing &oints !i he&.
• Pur#hase *a! Materias at the time !hen the sto#- rea#hes the minimum eve.
• The &ur#hases shoud not #ross the Ma%imum imit other!ise the sto#- -e&t in
stores ide.
• Luantity shoud /e ordered as &er the demand. =e #an assume the demand "or the
goods "rom &ast e%&erien#e.
• =e #an have more *a! materias !hi#h are im&orted "rom other #ountries /ut #arry
reasona/e sto#-s !hi#h are avaia/e o#ay.
b> I" !e &ur#hase ess 3uantity o" materias at a time it !i redu#e the #arrying #ost
/ut in#reases the ordering #ost and vise versa. There"ore o&timum ordering 3uantity
is ne#essary, !hi#h minimi>es the #ost.
Inventory Management APEX AUTO LTD.,
!> The #om&any shoud maintain a sa"ety eve and aso reordering &oint so that they
#ome to -no! at !hat time they shoud order "or the su&&y o" materia and need
not to su""er "rom short "a o" re3uired materia.
CONC-USION
A"ter the study, !e #an #ame to a #on#usion that, e""e#tiveness o" inventory management shoud
im&rove in a the as&e#ts, hen#e the industry #an sti strengthen its &osition /y oo-ing into the
"oo!ing.
• The inventory shoud /e "ast moving so that !arehouse #ost #an /e redu#ed.
• The "inished goods have to /e dis&at#hed in "easi/e time as soon as manu"a#turing
is #om&eted.
• O&timum order 3uantity shoud /e maintained, hen#e #ost #an /e minimi>ed.
• Pro&er inventory #ontro te#hni3ues are em&oyed /y the inventory #ontro
organi>ation !ithin the "rame!or- o" one o" the /asi# modes i-e A9C, )ML and
BED et#.
Inventory Management APEX AUTO LTD.,
(I(IIOGRA.+Y
(OO@S
• +inan#ia Management ; I.M.Panday
• Produ#tion Management ; J. Ash!ata&&a
3E(SITES
!!!.a&e%autotd.#om
!!!.googe.#om
Inventory Management APEX AUTO LTD.,
doc_209944580.doc
Management is feeling that their huge amount of working capital is held up, so the management wants to know whether they can reduce it through inventory management.
Inventory Management APEX AUTO LTD.,
EXECUTIVE SUMMARY
G C T M Industry in India has traveed are ess, no! India is one o" the main #otton
manu"a#turing $ e%&orting #otten in the in india. The #otten in India is !ith ma'or &ayers and
gadag #o o&erative mi Ltd is one o" argest manu"a#turer o" #otten in India.
Inventory is a #entra &ro#ess in Manu"a#turing Unit. This Inventory is #on#erns to a
de&artments i.e., "rom Panning De&artment to (eing De&artment in !hi#h it &asses though
Produ#tion De&artment, )* De&artment, Logisti# De&artment, +inan#e De&artment, Costing
De&artment, and Commer#ia De&artment et#. (o managing o" Inventory is having !ide (#o&e
in manu"a#turing Com&any.
“INVENTORY MANAGEMENT”
Statement of the problem
,Inventory management and its e""e#ts on !or-ing #a&ita.
Management problem
Inventory Management APEX AUTO LTD.,
Management is "eeing that their huge amount o" !or-ing #a&ita is hed u&, so the
management !ants to -no! !hether they #an redu#e it through inventory management.
Reear!h problem
As a/ove stated management &ro/em the study !as #arried to -no! ho! inventory
management he&s in &ro&er maintenan#e o" !or-ing #a&ita, so the tite o" this study is ,
inventory management and its e""e#t on !or-ing #a&ita.
Ob"e!t#$e of the t%&'
0. To study the inventory management /ased on the ratios
1. To "ind out the im&a#t o" inventory on !or-ing #a&ita.
2. To study the inventory management and its e""e#tive #ontro through various te#hni3ues.
4. To suggest the measures "or im&roving the inventory eve.
S!ope of the t%&'
Inventory management /eing a very im&ortant #on#e&t in a the #om&any5s having a void
#overage o"ten #as "or the manageria attention. In the modern times inventory management has
/e#ome the integra &art o" the a #om&anies. (o a the "irm gives s&e#ia im&ortan#e "or
inventory management. The ma'or o/'e#tive o" the study is to e%amine the e""e#tiveness o"
inventory management system ado&ted /y A-ash industry6 the study mainy "o#uses on the
te#hni3ues used /y the #om&any to #ontro the inventory. The study aso #overs other areas i-e
the "inan#ia ratios "or the &eriod o" 1774 to 1778.
SU( O()ECTIVES*
0 To study the di""erent a##e&ts o" Inventory Management.
MET+O,O-OGY
Inventory Management APEX AUTO LTD.,
.r#mar' ,ata*
0. Intera#tion !ith &ersonne o" the #om&any
1. Dire#t O/servation in Inventory
Se!on&ar' ,ata*
0. 9aan#e (heet
1. Turnover (tatements
2. Monthy Inventory (tatements
4. Com&any *e#ords
:. Internet
Tool Ue&;
M(<E%#e has /een used "or #a#uations.
IN,USTRY .RO/I-E
/A(RICATION
Inventory Management APEX AUTO LTD.,
=hen used as an industria term, a&&ies to the /uiding o" ma#hines, stru#tures and other
e3ui&ment, /y #utting, sha&ing and assem/ing #om&onents made "rom ra! materias. (ma
/usinesses that s&e#iai>e in meta are #aed fab shops.
(tee "a/ri#ation sho&s and ma#hine sho&s have overa&&ing #a&a/iities, /ut "a/ri#ation
sho&s generay #on#entrate on the meta &re&aration, !eding and assem/y as&e#t !hie the
ma#hine sho& is more #on#erned !ith the ma#hining o" &arts.
META- /A(RICATION
Meta "a/ri#ation is a vaue added &ro#ess that invoves the #onstru#tion o" ma#hines and
stru#tures "rom various ra! materias. A "a/ sho& !i /id on a 'o/, usuay /ased on the
engineering dra!ings, and i" a!arded the #ontra#t !i /uid the &rodu#t.
+a/ri#ation sho&s are em&oyed /y #ontra#tors, OEM?s @Origina E3ui&ment
Manu"a#turersA and BA*?s @Baue<added *eseerA Ty&i#a &ro'e#ts in#ude6 oose &arts,
stru#tura "rames "or /uidings and heavy e3ui&ment, and hand raiings and stairs "or /uidings.
01 ENGINEERING
The "a/ri#ator may em&oy or #ontra#t out stee detaiers to &re&are sho& dra!ings, i" not
&rovided /y the #ustomer, !hi#h the "a/ri#ating sho& !i use "or manu"a#turing. Manu"a#turing
engineers !i &rogram CCC ma#hines as needed.
21 RA3 MATERIA-S
(tandard ra! materias used /y meta "a/ri#ators are6
Inventory Management APEX AUTO LTD.,
• Pate Meta
• +ormed And E%&anded Meta
o Tu/e sto#-, CD(M
o (3uare sto#-
o (e#tiona metas @I /eams, = /eams, C<#hanne...A
• =eding !ire
• )ard!are
• Castings
• +ittings
41 CUTTING AN, (URNING
The ra! materia has to /e #ut to si>e. This is done !ith a variety o" toos.
The most #ommon !ay to #ut materia is /y (hearing @meta!or-ingA6
(&e#ia /and sa!s designed "or #utting meta have hardened /ades and a "eed
me#hanism "or even #utting. A/rasive #ut<o"" sa!s, aso -no!n as #ho& sa!s, are simiar to
miter sa!s /ut !ith a stee #utting a/rasive dis-. Cutting tor#hes #an #ut very arge se#tions o"
stee with little effort.
9urn ta/es are CCC #utting tor#hes, usuay natura gas &o!ered. Pasma and aser
#utting ta/es, and =ater 'et #utters, are aso #ommon. Pate stee is oaded on a ta/e and the
&arts are #ut out as &rogrammed. The su&&ort ta/e is made o" a grid o" /ars that #an /e re&a#ed.
(ome very e%&ensive /urn ta/es aso in#ude CCC &un#h #a&a/iity, !ith a #arouse o" di""erent
&un#hes and ta&s. +a/ri#ation o" stru#tura stee /y &asma and aser #utting introdu#es ro/ots to
move the #utting head in three dimensions around the materia to /e #ut.
Inventory Management APEX AUTO LTD.,
51 /ORMING
)ydraui# /ra-e &resses !ith v<dies are the most #ommon method o" "orming meta. The
#ut &ate is &a#ed in the &ress and a v<sha&ed die is &ressed a &redetermined distan#e to /end the
&ate to the desired ange. =ing /ra-es and hand &o!ered /ra-es are sometimes used.
Tu/e /ending ma#hines have s&e#iay sha&ed dies and mandres to /end tu/uar se#tions
!ithout -in-ing them.
*oing ma#hines are used to "orm &ate stee into a round se#tion.
Engish =hee or =heeing Ma#hines are used to "orm #om&e% dou/e #urvature sha&es
using sheet meta.
61 Ma!h#n#ng
+a/ sho&s !i generay have a imited ma#hining #a&a/iity in#uding6 meta athes,
mis, magneti# /ased dris aong !ith other &orta/e meta !or-ing toos.
71 3el&#ng
=eding is the main "o#us o" stee "a/ri#ation. The "ormed and ma#hined &arts !i /e
assem/ed and ta#- !eded into &a#e then re<#he#-ed "or a##ura#y. A "i%ture may /e used to
o#ate &arts "or !eding i" muti&e !edments have /een ordered.
The !eder then #om&etes !eding &er the engineering dra!ings, i" !eding is detaied,
or &er his o!n 'udgment i" no !eding detais are &rovided.
(&e#ia &re#autions may /e needed to &revent !ar&ing o" the !edment due to heat.
These may in#ude re<designing the !edment to use ess !ed, !eding in a staggered "ashion,
Inventory Management APEX AUTO LTD.,
using a stout "i%ture, #overing the !edment in sand during #ooing, and straightening o&erations
a"ter !eding.
(traightening o" !ar&ed stee !edments is done !ith an O%y<a#etyene tor#h and is
some!hat o" an art. )eat is see#tivey a&&ied to the stee in a so!, inear s!ee&. The stee !i
have a net #ontra#tion, u&on #ooing, in the dire#tion o" the s!ee&. A highy s-ied !eder #an
remove signi"i#ant !ar&age using this te#hni3ue.
(tee !edments are o##asionay anneaed in a o! tem&erature oven to reieve residua
stresses.
81 /INA- ASSEM(-Y
A"ter the !edment has #ooed it is generay sand /asted, &rimed and &ainted. Any
additiona manu"a#turing s&e#i"ied /y the #ustomer is then #om&eted. The "inished &rodu#t is
then ins&e#ted and shi&&ed.
Inventory Management APEX AUTO LTD.,
COM.ANY .RO/I-E
Came o" the #om&any ; A.EX AUTO -T,
Address o" the )ead o""i#e ; M<0 &hase< BII, TATA -andra main road, industria
area ADITDAPU*, EAM()EDPU*<F2107G ICDIA.
+a%; 7H:8<1177707
Te; G0<H:8<147F80:, 147G740 $ 12F024H
E<mai; in"oIa&e%autotd.#om
Address o" the registered ; Catara' mansion, 9ista&ur< F20770,
O""i#e EAM()EDPU*, ICDIA
+a%; G0<H:8<1414:1H
=E9(ITE; !!!.a&e%autotd.#om
Address o" the UCIT II ; APEX AUTO LTD @UCIT IIA 9o#- no; 1
Dhar!ad Te#on &remises, J.I.A.D.9, P.9. *oad
Dhar!ad< :F7778, India
+a%; 7F2H<21G2104
Te; 7F2H<21G2104
E<mai; &i&Ia&e%autoimited.#om
Cature o" the organi>ation ; 9asi#ay this #om&any is heavy "a/ri#ation
Com&any. They are manu"a#turing /a#- hoe
Loader #om&onents and e%#avator
Com&onents
Ty&e o" organi>ation ; A&e% auto imited #om&any is &rivate imited
Com&any
Inventory Management APEX AUTO LTD.,
A(OUT ORGANI9ATION
Ape: A%to -#m#te& ;<If 'o% !an #mag#ne #t= 3e !an fabr#!ate #t1<>
A&e% Auto Limited is a &u/i#y 3uoted #om&any !ith a num/er o" sharehoders, /oth
Indian and +oreign. Promoted /y Mr. Atu Taun- in 0GG: !ith a modest #a&ita outay o" *s. 241
a-hs, A&e% today has a #a&ita outay o" *s. 0177 a-hs. A gro!th o" over 2:7K &er annum.
A#hieved /y &rodu#ing thousands o" dynami#ay stressed ma#hined #om&onents "or the
#onstru#tion e3ui&ment industry
The raison deter o" A&e% is that the emerging s#enario in &ost i/erai>ed India indi#ated
that the nation !as &oised to go in "or massive in"rastru#ture /uiding; roads, su&er high!ays,
&orts, &o!er &ro'e#ts, and so on. This !oud &ut immense &ressure on manu"a#turers o" earth<
moving e3ui&ment. A&e% eases the oad on them /y su&&orting the industry !ith &re#ision
engineered su/<assem/ies and ma'or assem/ies that #an go dire#ty into their e3ui&ment, su#h
as revoving "rames, main "rames, /ooms, arms, do>ers, /u#-ets, and so on.
As a #ase in &oint, !e?re &roud to have /een entrusted !ith the singe share o" /usiness
"or a ma'or "a/ri#ations that go into the ma-ing o" TATA )ita#hi?s to& seing e%#avators, the
EX<H7. Over the ast : years, !e have "a/ri#ated more than 07,777 #om&onents o" this &arti#uar
mode aone.
VISION
To /e re#ogni>ed as a &remier LUALITD manu"a#turer and su&&ier "a/ri#ated #om&onents,
em/odying thus the s&irit o" #ommitment and humanity.
MISSION
• As &er #ustomer s#hedue re3uirement "u"i it, Deiver on time, every time.
• An eye on &rodu#t 3uaity and integrity
Inventory Management APEX AUTO LTD.,
• )ighest &rodu#tivity, there/y o""ering a #ost advantage to a our #ients.
3h' Ape:?
Aristote < Gree- inventor o" the (#ien#e o" Logi# < re#ommends studying the theory o" ?The 4
9e#auses? /e"ore ma-ing your #hoi#e =hy A&e% "or your Ma#hined "a/ri#ation M
The 0st /e#ause deas !ith !hat is it made o" M
A&e% uses ony &rime 3uaity stee sheets and &ates &ro#ured "rom eading &ayers in the
industry < Tata (tee and (AIL.
The 1nd /e#ause deas !ith ho! is it made M
A&e% has state o" art Materia Pro#essing "a#iities in#uding Indias argest aser #utting
ma#hine. And e%#eent Produ#tion Engineering systems set u& /y a highy e%&erien#ed and
te#hni#ay 3uai"ied team o" engineers.
The 2rd /e#ause deas !ith !hat is made M
9ased on our #ustomer?s dra!ings and design, A&e% manu"a#tures dynami#ay stressed
ma#hined "a/ri#ations #on"orming to a the s&e#i"i#ations aid do!n /y the #ustomer.
The 4th /e#ause deas !ith !hy is it made thus M
A&e% "oo!s the "irst three &re#e&ts so that the end #ustomer gets a !ord<#ass &rodu#t
!hi#h !i !ithstand the utimate test o" time.
Inventory Management APEX AUTO LTD.,
KEY AWARDS WON
? +or sa"ety in manu"a#turing &ro#ess a!ards @ess a##ident in manu"a#turing &ro#essA "or
#ontinuous 2 years "orm Te#o #onstru#tion e3ui&ment imited
? +or MICIMUM *EEECTIOC a!ard "orm Te#o #onstru#tion e3ui&ment imited
SWOT Analysis of the Company
APEX ATO !ID KEY STREN"T#S
01 STRONG .RO,UCT ,EVE-O.MENT
As &er the s&e#i"i#ation "rom Te#on the ne! &rodu#t is /een deveo&ed
0. 9y the highy 3uai"ied interna engineering de&artment
21 STRONG MERC+AN,ISING TEAM
Te#hni#ay 3uai"ied and high s-ied Mer#handising de&artment is another asset o" the
#om&any, !ho &ays a ma'or roe in e%e#uting the orders utmost e""i#ienty to the satis"a#tion o"
9uyers.
41 .RO/ESSIONA--Y MANAGE,*
aA Com&any has t!o units in Dhar!ad, one is A&e% auto Ltd Unit I and the other is A&e% auto
Ltd Unit II
/A Unit I is headed /y Mr1 Ar$#n& Ga%r= Unit II is headed /y Mr1 .ra$at @%mar Rath
Inventory Management APEX AUTO LTD.,
51 /ACTORIES ENGINEERE, TO .RO,UCT S.ECI/IC*
A their manu"a#turing units are engineered to &rodu#t s&e#i"i# and managed /y e""e#tive
and e""i#ient interna engineering de&artment.
61 AUA-ITY CONTRO- SYSTEM*
There is an inde&endent 3uaity audit team in &ro#ess #ontro system in a the "a#tories,
!hi#h has given 3uaity &rodu#tion #onsistenty.
71 SOURCING O/ RA3 MATERIA-S UN,ER VIGI-ANCE O/ AUA-ITY
AU,IT SYSTEM*
They sour#e a their ra! materias 077K "rom !ithin India. )o!ever, they have a rigid
#ontro on their 3uaity #ontro system !here /y they ensure that a the ra! materias are
&rodu#ed as &er their 3uaity standard eve /e"ore it gets dis&at#hed to their "a#tories.
81 IN +OUSE -A(*
They have a a/ situated in the ma'or &ro#urement #enters, su#h as in Dhar!ad and
Eamshed&ur to su&&ort their 3uaity #ontro team to #arryout the various 3uaity tests at a eve
on!ards to ensure that the &rodu#t is &rodu#ed a##ording to their 3uaity in<house.
B1 .RECS+I.MENT INS.ECTION TO MAINTAIN 9EROCC-AIM /ROM
(UYERS*
A thorough Ins&e#tion /y In<house Luaity Contro team and &re<shi&ment Ins&e#tion /y
/uyer re&resentative "or a their &rodu#ts he&s #om&any to maintain >ero<3uaity #aims
&osition !ith a their /uyers.
Inventory Management APEX AUTO LTD.,
D1 CON/I,ENCE O/ T+EIR (UYERS*
A the /uyers as o" today have /een !or-ing !ith them sin#e de#ades and they started !ith
them on #ontinues /asis !ith enhan#ed voume. This has given them huge #on"iden#e as the
#on"iden#e eve o" their /uyers is very high in their &rodu#ts, 3uaity, timey deiveries and
#ommitment to!ards !or-.
They have /een a!arded "or 2 #onse#utive years "or minimum re'e#tion and "or sa"ety in
&ro#ess o" manu"a#turing /y Te#o #onstru#tion e3ui&ment imited
APEX ATO !TD WEAKNESS
Co su#h entity has /een identi"ied so "ar.
APEX ATO !TD KEY OPPORTNITIES
Chan#es to get more &rodu#ts to manu"a#ture "orm the 9uyer i.e. Te#on #onstru#tion e3ui&ment
imited
APEX ATO !TD KEY T#REATS
More<3uai"ied #om&etitors
Inventory Management APEX AUTO LTD.,
CUSTOMER NAME
A&e% auto td unit II has having ony one #ustomer that is TELCOC COC(T*UCTIOC
ELUIPMECT LTD
SU..-IERS NAMES
SU..-IERS NAME -OCATION
AEE6 A@S+ATA ENTER.RISES= +U(-I
AE04 AS+A E-ECTRICA- F SA-ES +U(-I
AE56 A,ITYA E-ECTRICA- SA-ES COR.ORATION +U(-I
AE60 ANAN, AIR-INE ACCESSORIES +U(-I
AE62 A(+I ENGINEERING 3OR@S (ANGA-ORE
AE6B AMAR E-ECTRICA- 3OR@S +U(-I
AE74 AN,ANUR .I.ES ,ISTRI(UTORS ,+AR3A,
(E40 (E-GAUM CNC A..-ICATIONS .VT1 -T, (E-GAUM
(E47 ES+A@ ,A,A (AM(OO3A-A MUM(AI
(E4B (1 MA+EN,RA F (ROS ,+AR3A,
(E50 (ASAVES+3AR @+ANAVA-I ,+AR3A,
(E55 (E-UR IN,USTRIA- GASES ,+AR3A,
(E56 (1(1 ENTER.RISES +U(-I
CEE4 C+AC+RA SERVIUCES )AMS+E,.UR
CEE5 C+AITANYA SA-ES .VT1 -T,1 )AMS+E,.UR
,E0D ,YNAMIC ,RIVES +U(-I
,E2E ,E-TA /URNITURE .RIVATE-IMITE, C+ENNAI
EE28 EURE@A /OR(ES -T, ,+AR3A,
/EE4 /A(ROCTEC+ ENGINEERS ,+AR3A,
GEEB GOUTAM MAC+INE TOO-S +U(-I
GE27 GAYATRIMATA IN,USTRIES ,+AR3A,
+E0E +Y,RO.AC@;IN,IA> .VT -T, (E-GAUM
IE0B IN,US MAR@ETING (E-GAUM
)EE4 )@AY ENTER.RISES +U(-I
@EE8 @AMAT+ ENTER.RISES (E-GAUM
@EEB @A.I-A MAR@ETING ,+AR3A,
@E0E @ARNATA@A MATERIA- TESTING RESEARC+ (E-GAUM
@E47 @U-@ARNI (OO@ STA-- F STATIONERIES ,+AR3A,
MEEB MARUTI IN,USTRIA- SERVICE CENTRE (ANGA-ORE
ME08 MA,RAS +AR, TOO-S .VT -T, C+ENNAI
Inventory Management APEX AUTO LTD.,
ME0D MAN)UNAT+ GARMENTS ,+AR3A,
NE07 NAVYA ENTER.RISE +U(-I
OEE4 OMEGA /A(RICATIONS ,+AR3A,
.EE2 .ET+E (RA@E MOTOR .VT1 -T, RATNAGIRI
.EE7 .RAXAIR IN,IA .VT -T, (ANGA-ORE
.E2B .RESSURE CONTRO- EAUI.MENT @O-@ATTA
.E48 .AVAN E-ECTRICA- COM.ANY +U(-I
REE0 R1R1 ASSOCIATES +U(-I
REE8 RENU@A ENGINEERING 3OR@S ,+AR3A,
RE46 RITTA- IN,IA .VT -IMITE, (ANGA-ORE
SE0D SONA STEE- ENTER.RISES MUM(AI
SEB6 SA@S+AM AUTOMATION SYSTEMS +U(-I
SEB8 S+REE GANES+ GAS IM.-EMENTS AN, SER +U(-I
TEE0 TARAC@ ENGG SERVICES ,AVENGIRI
TEE4 TEC+NO COMMERCIA- COR.ORATION )AMS+E,.UR
TE40 TATA STEE- -IMITE, (ANGA-ORE
VEE0 VA-)I F (ROT+ERS +U(-I
VEE8 VI)AYS+EER ,ISE- SA-ES AN, SERVICES +U(-I
VEEB VO-TAS -IMITE, (ANGA-ORE
VE05 VI@AS VI,+UTI@ARAN .VT -T, ,+AR3A,
3EE7 3E-, IN,IA CONSU-TANCY ,E-+I
YEE4 YA--A..A +EGGERI ,+AR3A,
A&e% Auto Ltd Unit II is having a numerous su&&iers. They mainy &ur#hase *a!
Materias i-e M( &ates, 9ush (to&&ers, (eat Curve et# "rom Indian su&&iers.
Inventory Management APEX AUTO LTD.,
ORGANI9ATION STRUCTURE
Administration Assistant
Produ#tion
de&artment
)ead
(u&&y
Chain Mgmt
)ead
Luaity
Assuran#e
)ead
=or-ers (u/ordinate
Mem/ers
(tore
(u&ervisor
Produ#tion
(u&ervisor
Ma#hine
O&erators
Ma#hine
De&artment
)ead
Assistant
L. A
)e&ers
Produ#tion
Assistant Genera
Manager
)uman *esour#es
Assistant Genera
Manager
C E O
General
Manager
.ro&%!t#on .lann#ng F
Control Manager
/#nan!e Manager
Manag#ng ,#re!tor
Inventory Management APEX AUTO LTD.,
01 .eronnel ,epartment
This de&artment is amost i-e a human /rain, sin#e it is the human /eings that o&erate it.
This de&artment is #on#erned !ith im&ementation o" the &ans, !ith the !e"are o" the &ant,
!ith the industria reations and a/ove a sa"ety and se#urity o" the &ant and the !or- "or#e is its
&rime #on#erns. This de&artment oo-s a"ter the su/sidiaries i-e re#ruitment see#tion training
and indu#tion, #anteen, #ommunity deveo&ment dis#i&inary a#tions et#., !e"are, se#urity,
guesthouse, medi#a "a#iity et#., @As &er Indian +a#tories A#t 0G4F.A
Team A&e% Pro"essionay managed !ith a ri#h /end o" e%&erien#e and enthusiasti#
youth, Engineers, Di&oma )oders, dra"t men, ITI !eders and "itters, Gas #utters, !or-ers and
+a/ri#ation E%&erts.
Let5s go through the &ro#ess o" the *e#ruitment in A&e% Auto Ltd Unit II.
*e#ruitment is &ro#ess o" sear#hing the &ros&e#ting #andidate, stimuating and
en#ouraging them to a&&y "or the 'o/. The a/ove meaning says that every organi>ation !ant
s-ied !or-ers so A&e% Auto Ltd Unit II aso re#ruit #andidates as "oo!s , they "irsty #he#-
the organi>ation #uture !hi#h ty&e o" em&oyees needed in organi>ation and they aso #he#-
em&oyment #ondition in unit.
Inventory Management APEX AUTO LTD.,
They are sear#hing the #andidates in t!o !ays one is Advertisement and the other is
manua sear#hing. In advertisement they give "irsty the ad>5s i-e Dra"t Adv, Cient revie! adv
and Pa#e adv, and then they re#eive the #as then a##ess their CB5s. In manua sear#hing
&ro#ess they sear#h the em&oyee in &an sear#h, identity sear#h, and #onta#t sear#h, then they
#he#- the #andidates interest a"ter that they arrange meeting "or see#tion &ro#ess
Sele!t#on pro!e (ee#tion is a &ro#ess o" #he#-ing the #andidate5s -no!edge,
/ehavior, (-is, e%&erien#e, and 3uai"i#ations et# to see#t and &a#e the #andidate their #orre#t
&osition.
21 Store ,epartment
The ra! materias are stored se&aratey under materia #e in &rodu#tion de&artment6 as
&er the demand this de&artment does the !or- o" re#eiving and issuing o" materias.
41 .%r!hae ,epartment
Against the a&&roved &ur#hase re3uisition the de&artment &ur#hases o" ra! materia semi
"inished goods and A##essories and other needs o" the various de&artments. In order to ma-e the
!or- e""i#ient it has the system o" su/ #ontra#tors. (o the &ur#hase de&artment does the #reation
o" su/ #ontra#tors and vendors. This de&artment is guided /y the main motto the &ant and other
de&artments !or-ing. Let5s have a oo- on the "o! #hart o" the &ur#hase o" ra! materias in
A&e% Unit II
Luotations re3uest to one or more
vendors a##ording to re3uirement
Luotations Com&arisons
9est Cegotiation
Pur#hase Order
#reation
Pur#hase Order send to
vendor @su&&ierA
+oo! U& and &ro#ure the
materia "or &rodu#tion
Materia indenting
@As &er #ustomer
s#hedueA
Inventory Management APEX AUTO LTD.,
51 ,#pat!h ,epartment
The dis&at#h o" materias and "inished goods is done in a very e""i#ient !ay.
61.ro&%!t#on ,epartment
This de&artment entrusted !ith the tas- o" the &rodu#tion o" Do>er 9ade, Loader
9u#-et, Carro! 9u#-et, 9a#- )oe Main +rame, 9oom, Arm, Counter =eight, )eavy Duty
9u#-et, *evoving +rame and Tra#- +rame. +rom our very in#e&tion at Eamshed&ur in 0GGH and
at Dhar!ad in 0GGG, our in"rastru#tura "a#iities have /een meti#uousy &anned out !ith an eye
to!ards satis"ying the e%a#ting standards o" !ord #ass &ayers in the Earth Moving Industry.
Let5s have a oo- on the &ro#ess o" manu"a#turing &ro#ess in A&e% Unit II, /asi#ay this
#om&any is heavy "a/ri#ation #om&any, they are manu"a#turing 9ACJ )OE LOADE*
COMPOCECTD $ EXCABATO* COMPOCECT(. +oo!ing are the #om&onents. E)OC
DEE* @EDA 9oom, Arm, Loader Arm and EXCABATO*( 87, 007, 017, 9oom and
EXCABATO*( 87, 007,017 Arm. The /eo! sho!ing is the manu"a#turing &ro#ess o"
E%#avators<87 9oom.
Inventory Management APEX AUTO LTD.,
/loG !hart of E:!a$ator H 8E
COCTICUE
1
CD
(TAGE A((EM9LD
TE 178FG, TE 178G7
TA 77122N72
OUT O+ +IXTU*E
0
(T
(TAGE =ELDICG
IC +IXTU*E
(U9 A((EM9LD 0
(T
(TAGE
TA 700H4N77, TA 77122N18,
TA 77122N70, TA77122N7F,
TA77122N7:, TA77122N7H
TA77122N78
9OOM ECD 9*ACJET
A((EM9LD
TC 77::FN70@*)A, TC
77::FN71@L)A
9EBELICG O+ PLATE(
TA 77122N70, TA11722N78,
TA 77122N7F
Inventory Management APEX AUTO LTD.,
COCTICU
E
A((EM9LD OUT O+
+IXTU*E
TA 77122N71
(ETTICG
LE+T OBE* =ELDICG
TA 7122N1H
+IT ACD =ELD
*O9OT =ELDICG
*e'e#tionN
*e#ti"i#ation
IC(PECTIOC
Tota ength 2817ON< 4mm
To& ug distan#e =*T 9oom
End 9ra#-et, 9ottom ug
distan#e
P
COCTICUE
OUT O+ +IXTU*E
1
CD
(TAGE =ELDICG
IC +IXTU*E
TA 77122N7G, TA 77122N07
TA 77122N74
LUG +ITTICG
TA 77122N04, TA 77122N0:,
TA 77122N0H, TA 77122N08,
Inventory Management APEX AUTO LTD.,
Cot O-
OJ
Cot O-
OJ
Cot O-
OJ
Cot O-
MAC)ICICG
DE(PATC)
*ECTI+ICATIOC
*EEECTIOCN
*ECTI+ICATIOC
*EEECTIOCN
*ECTI+ICATIOC
IC(PECTIO
C
UT
TE(TICG
D*E((ICG
IC(PECTIO
C
IC(PECTIO
C
COCTICU
E
Inventory Management APEX AUTO LTD.,
OJ
Man%fa!t%r#ng pro!e of E:C8E (oom
Manu"a#turing &ro#ess o" E%< 87 9oom is having severa ste&s aready you -no!
in the "o! #hart no! /eo! sho!ing manu"a#turing &ro#ess in detai
0. *A= MATE*IAL(
In every manu"a#turing &ro#ess ra! materias must re3uired there "or APEX AUTO
LTD @UCIT IIA &ur#hase ra! materias "rom its main /ran#h at EAM()EDPU* and "orm A&e%
Auto Ltd @Unit IA. (ome materias dire#ty #omes to Unit II /ut some materias "irsty #omes to
Unit I and a"ter some &ro#ess it is send to Unit II. Then the stores de&artment sends materias to
&rodu#tion de&artment "or &rodu#tion
1. 9OOM ACD 9*ACJET A((EM9LD
In this &ro#ess 9oom and 9ra#-et assem/ed or &rodu#ed. )ere "irsty they 'oin
17mm 9-t Pate @*)A @TC 77::FN70A and TA77122N11 a##ording to the diagram. Then they 'oin
17mm 9-t Pate @L)A @TC 77::FN71A and TA 77122N00. A"ter that /a#- u& /ars are 'oin at the
/ottom o" /oth 17mm 9-t &ates. Then these t!o 'ointed /y the &ate 9a#- u& &ate @TA
77122N0GA, then they 'oin one s3uare &ate "or maintaining re3uired dimensions a"ter !eding o"
a this &arts this #om&ete the manu"a#turing o" 9oom And 9ra#-et Assem/y.
Inventory Management APEX AUTO LTD.,
2. 9EBELICG O+ PLATE(
(ome &ates /eveed /y Unit I and those &ates are To& roing &ate@TA 77122N70A,
(ide /end &ate L)@TA 77122N78A and side /end &ate *)@TA 77122N7FA
4. IC +IXTU*E (U9 A((EM9LD 0
(T
(TAGE
In this &ro#ess one su/ assem/y !i /e done in this stage 9O(( @TD700H4N77A is
'oined to To& roing &ate @TA 77Q122N70A at one side then at the to& o" the 9O(( they 'oin (ide
/end &ate L) @TA 77122N78A. A"ter that inside o" the 9O(( they 'oin 9O(( 9a#- u& Pate @TA
77122N18A. Then in the midde o" To& roing &ate and (ide /end &ate they 'oin Gasset
&ate@TA77122N7:A and near to that 9end Gasset &ate is 'oined !ith re3uired dimension, a"ter
that (ide /end &ate *)@TA 77122N7FA is 'oined a##ording to diagram so this #om&ete (u/
assem/y "irst stage.
:. OUT O+ +IXTU*E +I*(T (TAGE =ELDICG
A"ter #om&etion o" (u/ assem/y "irst stage ea#h &art is manuay !ed in this
&ro#ess.
H. (ECOCD (TAGE A((EM9LD
In this &ro#ess 9a#- u& /ar @TE178FGA 72 9a#- u& /ar@TE178G7A are atta#hed in
the inside &art o" 9ottom roing &ate @TA77122N72A at the right side !ith re3uired dimension
a##ording to diagram
8. OUT O+ +IXTU*E
In this &ro#ess se#ond stage !eding &ro#ess is done manuay.
F. IC +IXTU*E
In this &ro#ess "irsty &re&ared 9oom and 9ra#-et is 'oined /y using &ates su#h as
Cover &ate Hmm @TA77122N7GA and Cover &ate Fmm @TA77122N07A, a"ter that there is some
&a#e !hi#h is em&ty so that &a#e is /een "ied /y &ates Ta&er side Pate@TA77122N74A 1 &ates
a##ording to diagram. (o this &ro#ess "inishes /oom and /ra#-et assem/y.
Inventory Management APEX AUTO LTD.,
G. LUG +ITTICG
In this &ro#ess Lugs are "itted to the &re&ared #om&onent !hi#h are To& ug and
/ottom ugs and To& !ashers ugs and 9ottom !asher Lugs. +irsty /ottom ugs are 'oined to
ea#h other and then those ugs are atta#hed to the /ottom o" the &re&ared #om&onent. A"ter
'oining the /ottom ugs the to& ug is 'oined to the to& o" &re&ared #om&onent !ith re3uired
dimension or s&a#e so as to #om&ete this &ro#ess.
07. IC(PECTIOC
This is an im&ortant stage in manu"a#turing &ro#ess. In this stage they #he#- tota
ength o" the #om&onent. Tota ength shoud /e 2817mm i" there ess di""eren#e o" 4mm then
there is no &ro/em it must not e%#eed 4mm, then they aso #he#- #entre &oint o" the #om&onent
and to& ug distan#e to the /oom and /ra#-et, and /ottom ug distan#e o" the #om&onents i" there
is any &ro/em "ound then they go "or re#ti"i#ation o" the #om&onent.
00. A((EM9LD OUT O+ +IXTU*E
In this &ro#ess they 'oin one To& #over &ate @TA77122N71A to the /oom or &re&ared
#om&onent a##ording to the standard diagram and they aso 'oin RM5 &ate @TA77122N1FA atta#h
to the to& ugs so this #om&etes the &ro#ess o" assem/y.
01. *O9OT =ELDICG
*o/ot is a &rogramma/e muti&i#ation, mani&uate design to materia &art, toos
or s&e#iai>ed devi#es are t
o #arry out s&e#i"i# tas-.
In *o/ot !eding &ro#essed #om&onents are !ed /y *o/ot ma#hine. +irsty they
set the &rograms to the ro/ot "or !eding the #om&onents. Every #om&onent has is its o!n
!eding &rogram a##ording to the standard dra!ing o" the #om&onents, a"ter instaation o" the
Inventory Management APEX AUTO LTD.,
E% S 87 &rogram the !eding &ro#ess o" EX< 87 /oom starts, Mig !eding !ire is /een used /y
the ro/ot to !ed the #om&onent.Q
02. LE+T OBE* =ELDICG
A"ter #om&etion o" the *o/ot !eding there are some s&a#es e"t !hi#h are !ed
manuay /y !eders. In this &ro#ess they aso 'oin 9O(( *een"or#ement &ate @TA77122N1HA at
the to& and /ottom side o" the 9O(( a##ording to the diagram.
04. (ETTICG
In this &ro#ess they maintain re3uired dimension in various &arts o" the #om&onents
through the gas heating !hi#h in#udes Organ and Co
0:. IC(PECTIOC
In this &ro#ess they measure the #om&onents /y using measuring s#ae, try s3uare,
Bernier and gauges et#.
0H. MAC)ICICG
Ma#hining &ro#ess means removing the rough "a#e as &er the standard dra!ing. In
ma#hining &ro#ess they have t!o ty&e o" 'o/s one is miing and the other is /oring, in this
&ro#ess they are using t!o ty&e o" ma#hines one ()= that means hidden #ontro ma#hine and
the other is +anu# #ontro ma#hine. To redu#e heat in the &ro#ess they are using #ooant oi
/e#ause it he&s to redu#e the heat "or insert !are and tear and it he&s to smooth miing and
/oring o" the #om&onent in ma#hining they are having there stages
0. *ough stage
1. (emi "inish
2. +inish (tage
In E%< 87 /oom #om&onents are having mainy "our /ores /oss /ore must have the si>e o" 8:mm
and ug /ore must have the si>e o" ::mm and /ra#-et must have H7mm.
08. IC(PECTIOC
Inventory Management APEX AUTO LTD.,
In this &ro#ess they use the "oo!ing instruments to #he#- !eather the ma#hining
&ro#ess is &ro&ery done or not
0. 9ore dia gauge
1. Mi#rometer
2. Bernier
4. Measuring s#ae et#
0F. D*E((ICG
Dressing is the very im&ortant stage in manu"a#turing &ro#ess in this &ro#ess they
#ean the #om&onents /y using grinding ma#hine and sander ma#hine to remove s&atters #hi&s
et#, here they aso "it some items to &re&are #om&onents to a##ording to standard diagram.
0G. IC(PECTIOC
In this &ro#ess they are #he#-ing !eding de"e#ts in the #om&onents /y using
Utrasoni# Te#hni3ue @UTA ma#hine, the "oo!ing are the de"e#ts !e #an "ind /y using UT
ma#hine.
0. 9o! )oder area
1. Pro&er &enetration
2. Porsity et#
17. DI(PATC)
A"ter #om&etion o" a this &ro#esses the 3uaity assuran#e de&artment #he#-s the
3uaity o" the #om&onent and a"ter #he#-ing they "inay dis&at#h the &rodu#t so this #om&ete
the manu"a#turing &ro#ess o" EX<87 /oom mode.
A&e% Auto Limited is in the servi#e o" gaints in the "ied o" E%#avator
manu"a#turing Co. TELCOC "or H Dears /y maintaining a high LUALITD $ (JILL. And "or its
e""orts, it has /een #erti"ied /y TELCOC, and other 3uaity maintaing institutions.
Inventory Management APEX AUTO LTD.,
INVENTORY MANAGEMENT
Management o" inventory assumes im&ortan#e due to the "a#t that investment in
inventory #onstitutes one o" the ma'or investments in #urrent assets.
The term inventory re"ers to the sto#-&ie o" the &rodu#ts a "irm is o""ering "or sae and
the #om&onents that ma-e u& the &rodu#t. The assets !hi#h "irms store as inventory in
anti#i&ation o" need are;
@iA RaG Mater#al;
These re&resent in&uts &ur#hased and store to /e #onverted into "inished &rodu#ts in
"uture /y ma-ing #ertain manu"a#turing &ro#ess on the same.
@iiA 3orI #n .ro!e;
These re&resent semi<manu"a#tured &rodu#ts !hi#h need "urther &ro#essing /e"ore they
#an /e treated as "inished &rodu#ts.
@iiiA /#n#he& Goo&;
These re&resent the "inished &rodu#ts ready "or sae in the mar-et.
Inventory Management APEX AUTO LTD.,
@ivA Store an& S%ppl#e;
These re&resent that &art o" the inventory, !hi#h does not /e#ome a &art o" "ina &rodu#t
/ut are re3uired "or &rodu#tion &ro#ess. They may /e in the "orm o" #otton !aste, oi and
u/ri#ants, soa&s, /rooms, ight /u/s et#. Cormay, they "orm a very minor &art o" tota
inventory and do not invove signi"i#ant investment.
Let us have a oo- on Di""erent Inventory Management Bie!s. Means em&hasis roe o"
Inventory Management in di""erent (e#tors.
Physi#a Inventory
Management
+inan#ia Inventory
Management
Logisti# Inventory
Management
INVENTORY MANAGEMENT
INVENTORY MANAGEMENT
4
V
I
E
3
S
Inventory Management APEX AUTO LTD.,
Inventory Management is #onsisting o" 2 hands. The "irst hand as sho!n in the diagram
is that Physi#a Inventory Management, (e#ond one is +inan#ia Inventory Management and the
ast one @third oneA is Logisti# Inventory Management.
The reason /ehind o" dividing these vie!s is; to gather the in"ormation very easiy and
"or easy to understanding o" ea#h vie! thoroughy. Let us see the Meanings o" ea#h vie! one /y
one.
.h'#!al In$entor' Management
Mean#ng;
,Jee&ing o" goods is aso a ty&e o" management. =henever re3uirements #omes "rom
the &rodu#tion de&artment, &roviding o" those re3uired materias in a &ro&er manner $ &roviding
those at the s&e#i"ied &eriod, is the main motto o" Physi#a Inventory Management..
(enef#t for +ol&#ng In$entor' *
(enef#t #n .%r!ha#ng
(enef#t #n .ro&%!t#on
(enef#t #n 3orIC#nC.ro!e
(enef#t #n Sale
Ob"e!t of In$entor' Management*
Usuay, the #om&any is "a#ed !ith the "oo!ing #on"i#ting o/'e#tives in the area o"
inventory management;
Inventory Management APEX AUTO LTD.,
0. To #arry ma%imum inventory in order to "a#iitate e""i#ient and smooth &rodu#tion
and saes o&erations.
1. To minimi>e investment in inventory "or ma%imi>e the &ro"ita/iity.
9oth over<investment and under investment in inventories is undesira/e as /oth invove the
#onse3uen#es. The o$erC#n$etment #n$ol$e the !oneJ%en!e l#Ie;
iA Unne#essary /o#-ing o" "unds in inventory and hen#e oss o" &ro"it.
iiA E%#essive storage and Insuran#e Cost.
i. *is- o" i3uidity. The inventories on#e &ur#hased and stored are normay di""i#ut to
dis&ose o"" at the same vaue.
The %n&erC#n$etment #n$ol$e the !oneJ%en!e l#Ie;
/. I" su""i#ient sto#- o" ra! materia and !or- in &ro#ess is not avaia/e, it may resut into
"re3uent interru&tions in &rodu#tion.
#. I" su""i#ient sto#- o" "inished goods is not avaia/e it may not /e &ossi/e "or the
#om&any to serve the #ustomers &ro&ery and they may shi"t to the #om&etitors.
Thus, it #an /e said that the o/'e#tive o" inventory management is to minimi>e the
investment in inventory !ithout a""e#ting &rodu#tion or saes o&erations.
Inventory, as a #urrent asset, di""ers "rom the other #urrent assets /e#ause ony "inan#ia
managers are not invoved. *ather, a the "un#tiona areas, "inan#e, Mar-eting, Produ#t $
Pur#hasing are invoved.
The 'o/ o" the "inan#ia manager is to re#on#ie the #on"i#ting vie!&oints o" the various
"un#tiona areas regarding the a&&ro&riate inventory eves in order to "u"i the overa o/'e#tive
o" ma%imi>ing o" o!ner5s !eath.
TGoC(#n S'tem;
Inventory Management APEX AUTO LTD.,
Under this system, the inventory items are grou&ed into t!o #ategories. In one grou& or
/in, su""i#ient 3uantity is -e&t to meet the #urrent re3uirements over a designated &eriod o" item.
In another grou& or /in, a sa"ety sto#- is maintained to meet the re3uirements o" inventory at
times !hen the sto#- in the "irst /in is e%hausted and re<ordering o##urs.
/#nan!#al In$entor' Management
Mean#ng;
,*e#ording, maintaining and evauating o" sto#-s in a vaue terms is -no!n as +inan#ia
Inventory Management.. In other !ords vauation o" sto#-s, and #ontroing o" ordering and
hoding #osts and aso maintaining o" su""i#ient vaued sto#-s in Inventory is -no!n as +inan#ia
Inventory Management..
+inan#ia Inventory Management is again divided into three di""erent #ategories.
0A 9ased on Bauation
1A 9ased on Cost Anaysis
2A 9ased on +inan#ia (tatement
0> (ae& on Val%at#on
There are num/er o" generay a##e&ted methods o" determining the #ost o" inventories at
the #ose o" the a##ounting &eriod. The see#tion o" a suita/e method assumes signi"i#an#e in
vie! o" the "a#t that it has a dire#t /earing on the #ost o" goods sod and #onse3uenty on &ro"it.
Inventory Management APEX AUTO LTD.,
There"ore, the method shoud /e see#ted in the ight o" &ro/a/e e""e#ts on &ro"its over a &eriod
o" years.
Note;
It may not /e out o" &a#e to mention that on#e a method is see#ted, it must /e used
#onsistenty and #annot /e #hanged "rom year to year.
The dis#ussion here o" the methods to vaue inventory shoud, there"ore /e vie!ed in this
&ers&e#tive.
/#rt In /#rt O%t ;/I/O> Metho&;
The +I+O method o" vauation o" inventory is /ased on the assum&tion that the inventory
is #onsumed in #hronoogi#a order, that is, those re#eived "irst are issuedN#onsumed "irst and
vaue "i%ed a##ordingy. The merit o" +I+O method is that the &hysi#a "o! o" materias
mat#hes the "o! o" #ost.
-at #n /#rt O%t ;-I/O> Metho&;
Under the LI+O method, the #ost o" goods sod and the vaue o" #osing inventory #an /e
determined ony a"ter the "ina ot o" the year has /een re#eived. This is /e#ause o" the
assum&tion underying the vauation o" inventory, a##ording to this method. As the name LI+O
suggests, the use o" inventory is vaued on the /asis o" the inverse se3uen#e o" re#ei&ts. (in#e
the LI+O method assumes that the atest item in is the "irst item out, the #urrent #ost o" materias
are mat#hed !ith the #urrent seing &ri#eN#urrent revenues. This mat#hing o" #urrent #osts !ith
#urrent revenues is the essen#e o" the argument "or the LI+O method.
A$erage Cot Metho&;
Inventory Management APEX AUTO LTD.,
A##ording to average #ost method, ea#h &ur#hase is added to inventory and an average
#ost determined. Materias are #harged into #ost o" saes at this average unti another ot is
re#eived, !hen a ne! average unit inventory #ost is #a#uated.
Cote; There are so many other than these a/ove methods /ut most !ide use"uy methods are
these three so here !e dis#ussed those three methods ony.
2> (ae& on Cot Anal'#
Cot of +ol&#ng In$entor'* <
One o&erating o/'e#tive o" inventory management is to minimi>e #ost. E%#uding the
#ost o" mer#handise, the #osts asso#iated !ith inventory "a into t!o /asi# #ategories; @iA
Ordering or A#3uisition or (et<u& Costs, and @iiA Carrying Costs. These #osts are an im&ortant
eement o" the o&timum eve o" inventory de#isions.
0A Or&er#ng Cot;
It is the "i%ed #ost o" &a#ing $ re#eiving an inventory order. Li-e @aA Preå a &ur#hase
order or re3uisition "orm $ @/A re#eiving, ins&e#ting $ reordering goods re#eived to ensure /oth
3uantity $ 3uaity. It is aso #aed as setu& #ost.
Inventory Management APEX AUTO LTD.,
1A Carr'#ng Cot;
The se#ond /road #ategory o" #osts asso#iated !ith inventory is the #arrying #osts. They are
invoved in maintaining or #arrying inventory. The #ost o" hoding inventory may /e divided
into t!o #ategories.
0. Thoe that Ar#e ,%e to the Stor#ng of In$entor'; The main #om&onents o" this
#ategory o" #arrying #osts are @iA storage #ost, that is, de&re#iation, insuran#e,
maintenan#e o" the /uiding and utiities6 @iiA insuran#e o" inventory against "ire and the"t6
@iiiA deterioration in inventory /e#ause o" &i"erage, "ire, te#hni#a o/soes#en#e, stye
o/soes#en#e and &ri#e de#ine6 @ivA serving #osts, su#h as a/our "or handing inventory,
#eri#a and a##ounting #osts.
1. The Opport%n#t' Cot of /%n&; This #onsists o" e%&enses in raising "unds @interest on
#a&itaA to "inan#e the a#3uisition o" inventory. I" "unds !ere not o#-ed u& in inventory,
they !oud have earned a return. This is the o&&ortunity #ost o" "unds or the "inan#ia
#ost #om&onent o" the #ost.
-#nI#ng of Cot bae& an& .h'#!al (ae& In$entor' Management*
The #arrying #osts and the inventory si>e are &ositivey reated and move in the same
dire#tion. I" the eve o" inventory in#reases, the #arrying #osts aso in#rease and vi#e<versa.
Total Cot;
The sum o" inventory in#reases, the #arrying #osts re&resent the tota #ost o" inventory.
This is #om&ared !ith the /ene"its arising out o" inventory to determine the o&timum eve o"
inventory.
E!onom#! Or&er A%ant#t' ;EOA>;
Inventory Management APEX AUTO LTD.,
)o! mu#h inventory shoud /e /ought in a otM (houd the 3uantity to /e &ur#hased /e
arge or smaM (houd the re3uirements o" materia during a given &eriod @say H months or 0
yearA /e a#3uired in one ot or shoud it /e a#3uired in instaments or in severa sma otsM
(u#h inventory &ro/ems are #aed Order 3uantity &ro/ems.
There"ore EOL is that eve o" inventory at !hi#h tota #ost o" inventory #om&rising
ordering #ost $ #arrying #osts is the minimum
/orm%lae for !al!%lat#ng E!onom#! Or&er A%ant#t';
EOL P 1AO
C
=here,
AP Annua Luantity
OP Ordering Cost
CP Carrying Cost
A%mpt#on;
Inventory Management APEX AUTO LTD.,
01 The "irm -no!s !ith #ertainty the annua usage @#onsum&tionA o" a &arti#uar item o"
inventory.
21 The rate at !hi#h the "irm uses inventory is steady over time.
41 The orders &a#ed to re&enish inventory sto#-s are re#eived at e%a#ty that &oint in
time !hen inventories rea#h >ero.
Or&er .o#nt;
Reor&er .o#nt;
This is the &oint at !hi#h to order inventory<e%&ressed e3uation<ay as;
Lead Time in days X daiy usage.
-ea& T#me;
It is the time normay ta-en in re#eiving deivery a"ter &a#ing orders !ith su&&iers.
Safet' Sto!I;
It im&ies e%tra inventories that #an /e dra!n do!n !hen a#tua ead<time andNor usage
rates are greater than e%&e#ted.
2A (ae& on /#nan!#al Statement
+or having assistan#e /y /an-s, /an-ers shoud "irst evauate the "oo!ings;
0. Coatera (trength.
Inventory Management APEX AUTO LTD.,
21 In$entor' .o#t#on
41 Some /#nan!#al Rat#o
4. Payment o" a re3uirements i-e In#ome Ta%, =eath Ta%, Interests on de/t et#.,
:. Agreement &a&ers o" a authori>ed &ersons i-e De/enture hoders, (harehoders et#.,
H. A re3uired do#uments.
8. =ho is the 9uyer and his Country5s reationshi& et#,
The main re3uirement "or 9an-er is the +inan#ia (tatements o" 2 to : years. +rom this
statement it #an 'udge the "inan#ia strength o" the Com&any. =hie anay>ing o" +inan#ia
(trength o" the Com&any, Inventory is aso having its o!n em&hasis roe. 9e#ause i" #om&any is
having ess inventory than its re3uirement then #om&any !i get ess "inan#e "rom 9an-s and
visa<versa. (o here high inventory means, high in the sense #om&any shoud have su""i#ient
inventory a##ording to its order. Cot more than its order.
Let us have a oo- on some Inventory reated *atios and aso some im&ortant "inan#ia
ratios those, !hi#h are reated to Inventory. +rom evauating o" these +inan#ia *atios, #om&any
#an 'udge the sto#-sNgoods eve in Inventory, so that #om&any #an get oan "rom 9an-s.
The "inan#ia statement &rovides a summari>ed vie! o" the "inan#ia &osition and
o&erations o" a "irm. There"ore, mu#h #an /e earnt a/out a "irm "rom a #are"u e%amination o" its
"inan#ia statements as invaua/e do#umentsN&er"orman#e re&orts. The anaysis o" "inan#ia
statement is, thus an im&ortant aid to "inan#ia anaysis.
The anaysis o" "inan#ia statements is a &ro#ess o" evauating reationshi& /et!een
#om&onent &arts o" "inan#ia statements to o/tain a /etter understanding o" the "irm5s &osition
and &er"orman#e.
Tas-s o" +inan#ia anayst is to;
Inventory Management APEX AUTO LTD.,
0A (ee#t the in"ormation reevant to the de#ision under #onsideration "rom the tota
in"ormation #ontained in "inan#ia statement.
1A Arrange the in"ormation in !ay to highight signi"i#ant reationshi&s.
2A Inter&retation and dra!ing o" in"eren#es and #on#usions.
In /rie", "inan#ia anaysis is the &ro#ess o" see#tion, reation and evauation.
+inan#ia anaysis is the &ro#ess o" identi"ying the "inan#ia strengths and !ea-nesses o"
the "irm /y &ro&ery esta/ishing reationshi&s /et!een the items o" the /aan#e sheet and the
&ro"it and oss a##ount. +inan#ia anaysis #an /e under ta-en /y management o" the "irm, or /y
&arties out side the "irm, vi>., o!ners, #reditors, investors and others. The nature o" anaysis !i
di""er de&ending on the &ur&ose o" the anayst.
? Management o" the "irm !oud /e interested in every as&e#t o" the "inan#ia anaysis. It
is their overa res&onsi/iity to see that the resour#es o" the "irm are used most
e""e#tivey and e""i#ienty, and that the "irm5s "inan#ia #ondition is sound.
? Trader #reditors are interested in "irm5s a/iity to meet their #aims over a very short
&eriod o" time.
? Investors, !ho have invested their money in the "irm5s shares, are most #on#erned a/out
the "irm5s earnings.
? (u&&iers o" ong<terms de/t, on the other hand are #on#erned !ith the "irm5s ong<term
soven#y and surviva. They anay>e the "irm5s &ro"ita/iity over time, its a/iity to
generate #ash to /e a/e to &ay interest and re&ay &rin#i&a and the reationshi& /et!een
various sour#es o" "unds.
21Rat#o Anal'# relate& to In$entor'
*atio anaysis is a &o!er"u too o" "inan#ia anaysis. A ratio is de"ined as ,the indi#ated
3uotient o" t!o mathemati#a e%&ressions. and as ,the reationshi& /et!een t!o or more things..
In "inan#ia anaysis ratio is used as a /en#hmar- "or evauating the "inan#ia &osition and
Inventory Management APEX AUTO LTD.,
&er"orman#e o" a "irm. *atios he& to summari>e arge 3uantities o" "inan#ia data and to ma-e
3uaitative 'udgment a/out to "orm a 3uaitative 'udgment the "o#us o" "inan#ia anaysis is on the
-ey "igures in the "inan#ia statements and the signi"i#ant reationshi&s that e%ist /et!een them.
T'pe of Rat#o*
a. Li3uidity *atios
/. A#tivity *atios
#. Pro"ita/iity *atios
A. -#J%#&#t' Rat#o;
Li3uidity re"ers to the a/iity o" the "irm to meet its o/igations in the (hort run, usuay
one year. Li3uidity ratios measure the a/iity o" the "irm to meet its #urrent o/igations.
Li3uidity ratios /y esta/ishing a reationshi& /et!een #ash and other Current assets to Current
o/igations &rovide a 3ui#- measure o" i3uidity. A "irm shoud ensure that it does not su""er
"rom a#- o" i3uidity, and aso that it does not have e%#ess i3uidity.
There"ore it is ne#essary to stri-e a &ro&er /aan#e /et!een high i3uidity and a#- o"
i3uidity. +oo!ing are some o" the im&ortant i3uidity ratios;
0. Current *atio
1. Lui#- *atio
2. Cet !or-ing Ca&ita *atio
9. A!t#$#t' Rat#o;
Inventory Management APEX AUTO LTD.,
A#tivity ratios are #on#erned !ith measuring the e""i#ien#y in asset management.
(ometimes, these ratios are aso #aed e""i#ien#y ratios or asset utii>ation ratios. The e""i#ien#y
!ith !hi#h, assets are #onverted into saes. The greater the rate o" turnover or #onversion, is the
more e""i#ient the utii>ation. +or this reason, su#h ratios are aso designated as turnover ratios.
Turnover is the &rimary mode "or measuring the e%tent o" e""i#ient em&oyment o" assets /y
reating the assets to saes. An a#tivity ratio may, there"ore, /e de"ined as a test o" the
reationshi& /et!een saes and various assets o" a "irm. (evera a#tivity ratios #an /e #a#uated
to 'udge the e""e#tiveness o" asset utii>ation.
0. Inventory Turnover
1. Assets Turnover
2. +i%ed Assets and Current Assets Turnover
Aet Mea%rement for &#fferent metho& of #n$entor' $al%at#on;
/I/O Metho&;
Under this method, as noted earier, inventory is vaued on the assum&tion o"
#hronoogi#a #ost "o!. This im&ies that the unusedNunsod inventory #onsists o" the most
re#ent &ur#hases and, there"ore, #an /e assumed to /e vaued at #urrent #ost. The vae o"
inventory as sho! in the /aan#e sheet !oud re"e#t the current cost, i" +I+O method !ere used.
-I/O Metho&;
A##ording to this method, o/viousy, the inventory "igure !oud not a&&ear in the
/aan#e sheet at the Current Cost. It !i re"e#t rather the #ost o" ra! materias &ur#hased in the
&ast year. Assuming rising &ri#es, the inventory vaue /ased on the LI+O method !oud tend to
Inventory Management APEX AUTO LTD.,
/e undervalued. +or e%am&e inventory &ur#hased as eary as si% years or more. In that
situation, the inventory "igure in#uded in the /aan#e sheet !oud /e a#tuay the &ri#e &aid on
the &ur#hase o" inventory si% years ago. In a &eriod o" rising &ri#es, this vaue !oud naturay
/e grossy out o" ine !ith the #urrenty &revaiing &ri#e. This !oud im&y that the /aan#e
sheet !oud not re"e#t the #urrent !orth o" the inventory. That the inventory vaue !i not /e
#orre#t is another !ay o" saying that the /aan#e sheet !i &resent a distorted &i#ture o" the
a""airs o" the "irms.
A &ossi/e soution to #orre#t the a/ove distortion in the /aan#e sheet im&i#it in the
under<vauation o" inventory !ith the LI+O method is a modi"iedNad'usted LI+O method.
The modi"ied method !i, thus, serve the needs o" #orre#t in#ome determination as !e
as #orre#t asset measurement. )o!ever, this is su/'e#t to a 3uai"i#ation, namey, the #urrent
year5s &ur#hase @unitsA shoud e%#eed the #urrent year5s #onsum&tion @unitsA. I" "or reasons su#h
as stri-eNo#-outs, trans&ortation &ro/ems, and so on, the #urrent #onsum&tion e%#eeds the
#urrent &ur#hases, &ro"its !i rise. The in#rease !i de&end u&on the e%tent o" i3uidation o"
the &revious years5 inventory. This in#rease in &ro"it is termed as i3uidation &ro"it, !hi#h is
e3ua to the di""eren#e /et!een the #urrent #ost o" inventory and the #ost o" inventory &ur#hased
in the &ast.
Inventory Management APEX AUTO LTD.,
-og#t#! In$entor' Management
Mean#ng of -og#t#!;
Logisti#s is the Organi>ation o" (ervi#es and (u&&ies. In other !ords, ogisti#s is
ma-ing and ta-ing the &ermission "or seNe%&orting the #om&any5s &rodu#ts in "oreign #ountries.
In "uy e%&ort<oriented /usiness this is one o" the main de&artment, !here this
de&artment gets an a&&rova to se their goods in "oreign #ountries. And aso their main
intention is to maintain a do#uments o" those that are reated to the e%&orting o" their &rodu#ts.
-og#t#! In$entor' Management;
Des, aready !e have o/served a/out the meaning o" Inventory Management in the
Organi>ation. 9ut in "uy e%&ort oriented /usiness6 Inventory Management is a very im&ortant
#on#e&t. 9e#ause every e%&orter or im&orter, they do not -no! a/out ea#h other !ho are staying
in other #ountries.
Inventory Management APEX AUTO LTD.,
(o every #om&any, !hi#h are e%&orting or im&orting o" materias, they shoud
#ommuni#ate ea#h other through /an-s ony. These /an-s are isted /y Centra 9an- o" that
Cation. In our Country *9I is ists some /an-s "or intermediating &ur&ose and every year *9I
de#are some isted 9an-s as a mediator.
+or &rodu#ing o" materias and seing o" those materias, every #om&anyN/usiness shoud
need a =or-ing Ca&ita. This =or-ing Ca&ita #an aso "inan#ed /y 9an-s. =hie in e%&ort
oriented /usiness it is sighty di""erent tas-. )ere 9an-s #an a#ts as "inan#ia assistan#e "or Pre<
(hi&ment and "or Post (hi&ment o" Goods.
+or having an assistan#e /y /an-s they shoud "irst evauate "oo!ings;
0. Coatera (trength.
1. Inventory Position
2. (ome +inan#ia *atios
4. Payment o" a re3uirements i-e In#ome Ta%, =eath Ta%, Interest et#.,
:. Agreement &a&ers o" a authori>ed &ersons i-e De/entures, (harehoders et#.,
H. A re3uired do#uments.
8. =ho is the 9uyer and his Country5s reationshi& et#,
9e"ore going to detai de#ision on 9an-s et us have a oo- on Commer#ia Pa&ers. =hi#h are
aso &arts o" "inan#ing the !or-ing #a&ita re3uirements o" the Com&anies.
Commer!#al .aper @CPsA;
In the re#ent &ast, Commer#ia Pa&ers @CPsA have /e#ome one o" the /est methods "or
"inan#ing the !or-ing #a&ita re3uirements o" the #om&anies.
The #om&anies trying to raise the "unds /y issuing the CP are reguated /y Guideines "or
issue o" Commeri#a Pa&ers @CPA, 1777 issued /y *eserve 9an- o" India on O#to/er 07, 1777.
Inventory Management APEX AUTO LTD.,
These guideines a&&y to the #om&anies trying to raise the "unds /y issuing the CPs. As &er
these guideines, a a #om&any means a #om&any as de"ined in se#tion 4:<I@aaA o" *eserve 9an-
o" India A#t, 0G24. (e#tion 4:<I@aaA o" *eserve 9an- A#t, 0G24 de"ines a #om&any as the
#om&any as the #om&any as de"ined in se#tion 2 o" the #om&anies A#t, 0G:H.
In the Indian #ir#umstan#es, /an-s &ay a very ma'or roe in "inan#ing the !or-ing #a&ita
re3uirement o" the organi>ations. =e !i #onsider the /an- as a sour#e "or "inan#ing the
!or-ing #a&ita re3uirement o" the organi>ations under the "oo!ing heads;
Amo%nt of A#tan!e
To o/tain the /an- #redit "or "inan#ing the !or-ing #a&ita re3uirements, the #om&any is
re3uired to estimate the !or-ing #a&ita re3uirement &ro&ery. To estimate the re3uirement o"
!or-ing #a&ita re3uirement &ro&ery, the #om&any !i /e re3uired to estimate its eve o"
#urrent assets and #urrent ia/iities &ro&ery, as !or-ing #a&ita is the di""eren#e /et!een #urrent
assets and #urrent ia/iities.
+or this, the te#hni3ues i-e ratio anaysis, trend anaysis et#., #an /e used /y the
#om&any. More a##urate the estimation o" the eve o" #urrent assets and #urrent ia/iities, more
a##urate the estimation o" eve o" #urrent #a&ita. Then, the #om&any !i have to a&&roa#h the
/an- aong !ith the ne#essary su&&orting data. On the /asis o" estimates su/mitted /y the
#om&any, the /an- may de#ide the amount o" assistan#e that #an /e e%tended. =hie e%tending
the !or-ing #a&ita assistan#e, the /an- may &res#ri/e the margin money re3uirement. The
margin money sti&uation is made /y the /an-s in order to ensure that /orro!ing #om&any5s o!n
sta-e in the /usiness and aso to &rovide the #ushion against the &ossi/e redu#tion in the vaue
o" se#urity o""ered to the /an-. The &er#entage o" margin money sti&uation may de&end u&on
the #redit standing o" the /orro!ing #om&any, "u#tuations in the &ri#e o" se#urity and the
Inventory Management APEX AUTO LTD.,
dire#tives o" *9I "rom time to time. The genera &rin#i&e a&&i#a/e !i /e, ,more di#ey the
nature o" se#urity, higher o" se#urity, higher !i /e the margin money sti&uations..
/orm of A#tan!e;
A"ter de#iding the amount o" overa assistan#e to /e e%tended to the #om&any, the /an- #an
dis/urse the amount in any o" the "oo!ing "orms;
0. Con<+und 9ased Lending
1. +und 9ased Lending.
Non /%n& (ae& -en&#ng;
In #ase o" Con<+und 9ased Lending, the ending /an- does not #ommit any &hysi#a out"o! o"
"unds. As su#h, the "unds &osition o" the ending /an- remains inta#t. The Con<+und 9ased
Lending #an /e made /y the /an-s in t!o "orms;
a. 9an- Guarantees
/. Letter o" Credit
/%n& (ae& -en&#ng;
Inventory Management APEX AUTO LTD.,
In #ase o" Con<+und 9ased Lending, the ending /an- #ommits the &hysi#a out"o! o" "unds.
As su#h, the "unds &osition o" the ending does not a""e#ted. The +und 9ased Lending #an /e
made /y the /an-s in "oo!ing "orms;
a. Loan
/. Overdra"t
#. Cash Credit
d. 9is Pur#hasedNDis#ounted
e. =or-ing Ca&ita Term Loans
". Pa#-ing Credit
Se!%r#t' for A#tan!e;
The /an- may &rovide the assistan#e in any o" the modes as stated a/ove. 9ut normay no
assistan#e !i /e avaia/e uness the #om&any o""ers some se#urity in any o" the "oo!ing
"orms.
0A )y&othe#ation.
1A Pedge
2A Lien
4A Mortgage
Inventory Management APEX AUTO LTD.,
.ro!e of .h'#!al In$entor' Ma#ntenan!e #n Ape: A%to -t&
Ea#h unit o" A&e% auto td has its o!n store de&artment that !e #an #a it as 3orIC#nC
pro!e #n$entor'.
This inventory &ro#ess is "uy #om&uteri>ed and here &a&er !or- is very ess. Ony
maintaining o" do#uments, !hi#h !ere sent /y su&&iers as i-e #haans et#., are ony here to
maintain as &a&er do#uments. Other!ise it is "uy #om&uteri>ed. Through #om&uters ony (tore
De&artment re#eives Pur#hase Order and /y #om&uter ony they send do#uments o" issuing o"
materias to manu"a#turing unit.
+or easy to #ommuni#ate and &anning o" &rodu#tion a#tivity, A&e% Auto Ltd Unit II has
having ony one Godo!n in Pro#edures invoved in re#eiving and issuing o" materias are as
"oo!s;
0A Godo!n !i "irst get Pur#hase Order Co..
.%r!hae Or&er N%mber*
Inventory Management APEX AUTO LTD.,
This PO is #omes "rom Pur#hase De&artment. This Pur#hase De&artment gives a num/er
"or the ea#h order made /y Pur#hase De&artment ony.
9e"ore &a#ing any order to su&&iers they "irst #he#-s the materias in inventory as to
-no! a/out !hether materias are avaia/e in Inventory or not. I" not avaia/e in Inventory
then ony they !i &a#e an order a##ording to the re3uirement.
In A&e% Auto Ltd @Unit IIA, it is very im&ortant to note that; &ur#hase de&artment a!ays
&a#es an order to those materias !hi#h have ordered /y CustomersN/uyers o" A&e% Auto Ltd
@Unit IIA.
(o, normay it does not have any sto#-s in its inventory. +or every order "rom #ustomers
they ma-e a "resh Pur#hase Order "or &ur#hasing o" materias. It means !hatever the materias
are re3uiring "or &resent orders, those materias are ony they -e&t as sto#-s in Inventory.
In some #ases, materias may /e in Godo!n, !hi#h they #a it as “(%ffer Sto!I”1 I"
these od sto#- is mat#hes the re3uirements o" &rodu#t !hi#h has ordered no! /y its #ustomers,
then &ur#hase De&artment !i sent a noti#e to Inventory "or issuing o" those materias. These
od sto#- may /e in "orm o" *a! Materia or in "orm o" "inished goods. A&e% Auto Ltd @Unit IIA
a!ays &rodu#es more than its re3uirements. +or e%am&e i" Te#on has ordered "or 17 EX< 87
/oom then A&e% &rodu#es 1: EX S 87 i.e., 17K more than its re3uirements. (o the remaining or
e%#esses materia they #a it as “(%ffer Sto!I”1
1A *e#eiving o" Materias
Any materias #omes<in or goes<out "rom the Godo!n it shoud /e enter in the Gate that
is they #a it as ,Gate Entr'., !hi#h is maintained /y se#urity Guard. Guard is not an
em&oyee o" an organi>ation. )e is a #onta#t</ased em&oyee.
Inventory Management APEX AUTO LTD.,
=hen Inventory re#eives materias it "irst ins&e#ts some sam&es, so "or it, they #a u& as
,Spot Inpe!t#on.. )ere they ins&e#t the "oo!ing &oints;
aA Is it our su&&ier ony and is this &ar#e is "or us onyM
d. Are these re#eived materias a##ording to the Pur#hase OrderM Li-e
i. Luantity
ii. Date, et#.,
e. Is it having a re3uired Chaans or Invoi#es and aso does it a&&roved /y authori>ed
&ersonM
". Is it having a re3uired do#uments i-e O#troi et#.,
g. Is that Chaan #onsisting the #orre#t in"ormation o" materiasM
A"ter a&&rova o" materias /y sam&e ins&e#tion, inventory de&artment &ut these detais
in manua /oo-, this do#umentation is #aed as ,,a' (ooI.. This day/oo- is #onsisting o"
in"ormation i-e Chaan Co., P.O. Co., (tye Co., Des#ri&tion o" Materias, (u&&ier5s Came,
trans&orter5s Came, and Luantity.
A"ter #om&eting o" these &ro#esses, materias !i send to ins&e#tion de&artment. In this
ins&e#tion de&artment they ins&e#t in<detais o" materias. A"ter a&&rova /y ins&e#tion
de&artment, this inventory de&artment ma-es one do#ument, !hi#h is they #a it as ,Goo&
Re!e#$e& ,o!%ment..
This Goods *e#eived Do#ument is #onsisting o" G* Co., Date, G*C Ty&e @In<storeA,
Mode o" Trans&ort, Chaan Co., Chaan Date, (tatus, Gate Entry Co., Gate Entry Date, Priority
Co., a Detais o" Materias and re#eived 3uantity and a#tua 3uantity aso enters there.
2. Issuing o" Materias
Inventory Management APEX AUTO LTD.,
Mer#handising De&artment !i send one #ard #aed ,)ob Car&. !hi#h it #onsisting o"
a detais o" materias re3uires to &rodu#e a &rodu#t. A##ording to that Card Inventory
de&artment shoud send the materias to manu"a#turing de&artment.
A"ter re#eiving o" materias /y manu"a#turing de&artment "rom inventory de&artment
they issue one do#ument a/out re#eived o" materias, 3uantity, des#ri&tion o" materias et#.
Manu"a#turing De&artment uses these materias "or manu"a#turing &ur&ose. In manu"a#turing
&ro#ess sometimes it may ha&&ens i-e some materias get damages and some are not "uy
mat#hes !ith re3uirements. Then those materias !i /e return to inventory.
A"ter utii>ing o" a these materias /y manu"a#turing de&artment they !i send one
do#ument #aed ,Or&er Complet#on Report. @OC*A. This re&ort #onsists the in"ormation o"
Per#entage o" Utii>ed Materias "or &arti#uar order and &er#entage o" !astage o" materias.
This re&ort !i send to inventory and aso to Mer#handising De&artment.
4. *eturn 9a#- Materias "rom Manu"a#turing Units;
Inventory ta-es those materias, !hi#h are return /a#- "rom manu"a#turing units /e#ause
o" e%#ess or sur&us o##urs !hie manu"a#turing o" &rodu#ts. This e%#ess or sur&us e%ists
/e#ause o" &ur#hase de&artment, they a!ays orders 17K more than its re3uirement to meet the
re3uirement o" ne%t month. (o these materias are -e&t in Inventory as name it as ,(%ffer
to!I..
These 9u""er (to#-s !i /e utii>e !hen #om&any get the same ty&e o" Order. Inventory
issues these materias @9u""er (to#-A ony !hen it re#eives instru#tion "rom Mer#handising and
&ur#hasing De&artment.
:. *e'e#ted Materias;
Inventory Management APEX AUTO LTD.,
Ins&e#tion de&artment ma-e the re'e#tion o" materias, !hen materias are not as &er
re3uirements and not as &er the order. These re'e#ted materias are -e&t in se&arate se#tion /y
Inventory De&artment.
Inventory de&artment in"orm to Pur#hase De&artment and aso noti#e to (u&&iers a/out
re'e#tion o" materias. That is #aed ,Re"e!t#on Car&.. In this #ard it invoves Came o"
(u&&ier, Des#ri&tion o" Materias, Chaan Co., Chaan Date, Gate Entry Co. $ Date, Co. o"
Luantity re'e#ted, *eason "or re'e#tion et#.,
(ome times su&&ier may issue ne! materias in &a#e o" re'e#ted materias. Or he may
give some #om&ensation "or !rong su&&y and that is a"ter &aying o" "u &ayment o" materias.
Se!t#on #n In$entor';
Inventory is again divided into : se#tions. Ea#h is se#tion handing /y ony one &ersons,
!ith the he& o" 2 to 4 assistants, !ho he&s in maintaining o" materias at s&e#i"i# area. +ive
se#tions are as "oo!s;
Se!t#on #n In$entor'
,2E0
A /ought out items are /een stored here and &ro#essed to the manu"a#turing as !hen re3uired
,2E2
A #onsuma/es and toos and maintenan#e a##essories are /een stored in this se#tion
,2E4
A ra! materias i-e dire#t, semi "inished goods are stored in this se#tion and &ro#essed to the
manu"a#turing as !hen re3uired and od sto#- and re'e#ted items are aso stored in this se#tion.
,2E5
Gas tan- and #yinders is stored in this se#tion.
,2E6
Inventory Management APEX AUTO LTD.,
A "inished goods are stored in this se#tion
.%r!ha#ng .ro!e&%re of Mater#al
In A&e% they &ur#hase materias at "rom a muti&e (u&&iers. There is a reason "or
&ur#hase materias "rom muti&e su&&iers. The reason is i" one su&&ier deays to "u"i the
su&&y then there must /e aternative su&&ier "or it to "u"i the re3uirement. (o there must me
no sto#- outs in the &rodu#tion &ro#ess
A&e% a!ays &ur#hases at /u- /ut /y s#hedue !ise. In other !ords they &ur#hase
materias at a time "or s&e#i"i# order. They ma-e the agreement o" su&&ying materias ony at
on#e. And they negotiate the &ri#e ony at on#e that is /e"ore su&&ying o" materias and on#e
their agreement is over then they &rovide s#hedue to su&&ier to su&&y the materias at a
s&e#i"i# time and at a s&e#i"ied 3uantity.
(o it redu#es the s&a#es, !hi#h o##u&ies in the Godo!n. (o this method is suita/e "or
this ty&e o" industry /e#ause o" same orders "rom #ustomers.
Inventory Management APEX AUTO LTD.,
3I. Store
Co! !e #ome to the =IP (tore. As !e have aready seen that this A&e% is having ony
one Godo!n and every unit is having its o!n (tore De&artments. As !e -no! that =or- In
Pro#ess (tore means (emi<"inished Goods, here goods are not #om&eted yet and not these are in
"uy ra! materias "orm.
(o in vauation matter it is having sighty di""erent !ay. And in A&e% it is as "oo!s;
Des, these goods are in#udes some a/our #ost, some other #osts. (o in vauation o" =IP they
vauate at *a! Materia Pri#e o" that goods PLU( in#urred #ost to &rodu#e ti no!.
/#n#he& Goo&
Bauation o" +inished Goods in A&e% is at 07K ess than (eing Pri#e o" those "inished
goods. +inished Goods are in the sense these goods shoud /e ready to dis&at#h.
There is no se&arate Godo!n "or +inished GoodsNProdu#ts. Every unit is having it5s o!n
+inished Goods Godo!n. In that Godo!n ony they store these Goods. And dis&at#hing o"
these &rodu#ts is dire#ty /y ea#h unit. They do not #onsoidate these goods6 they dis&at#h these
"inished &rodu#ts dire#ty /y ea#h unit.
A&e% auto td @Unit IIA has ony one #ustomer that is Te#on. (o they dire#ty su&&y
"inished &rodu#ts to its #ustomers. (o it is not ne#essary to have another Godo!n "or +inished
Goods.
Inventory Management APEX AUTO LTD.,
-og#t#! In$entor' Management
There is a de&artment #aed Logisti# De&artment in A&e% Auto Ltd, !hi#h is #on#erning
a/out seing o" goods and maintaining o" a do#uments reated to e%&orting o" &rodu#ts and aso
ta-ing the &ermission "rom /an-s to se s&e#i"i# &rodu#ts in s&e#i"i# #ountries. (o Logisti#
De&artment is one o" the im&ortant "ront<o""i#e De&artments, i-e Mar-eting De&artment.
Mar-eting De&artment is one, !hi#h ta-es the orders "rom its #ustomers. And this is
entirey di""erent "rom Logisti# De&artment. Logisti# De&artment is one, !hi#h ses its &rodu#ts
and maintains a do#uments. 9ut Mar-eting De&artment is #omes into &i#ture /e"ore &rodu#tion
&ro#ess starts. And Logisti# De&artment #omes into &i#ture ony a"ter the &rodu#tion &ro#ess
#om&etes.
Logisti# De&artment is not ony ta-ing the a&&rova "or seing its &rodu#ts, /ut aso it
!i #on#ern "or ta-ing oan "or its !or-ing #a&ita. 9an-s !i &rovide these !or-ing #a&ita
Inventory Management APEX AUTO LTD.,
re3uirements in t!o senses; one is on Pre<(hi&ment Loan and another one is Post<(hi&ment
Loan.
There are so many !ays to get oan "or !or-ing #a&ita re3uirement. A&e% get oan "or
=or-ing Ca&ita re3uirement either through Commer#ia Pa&ers or through Letter o" Credit.
A&e% is ta-ing oan "or =or-ing Ca&ita *e3uirements "rom A%is 9an-.
3ho !an #%e the C.;
A #om&any !i /e eigi/e to issue the CP &rovided;
0. the tangi/e net !orth o" the #om&any as &er atest audited /aan#e sheet is not ess than
*s. 4 Crores.
Note:
Tangi/e net !orth means share #a&ita &us "ree reserves duy redu#ed /y intangi/e
assets i-e a##umuated osses, de"erred revenue e%&enditure et#. +ree *eserves in#ude share
&remium and de/enture redem&tion reserve /ut do not in#ude revauation reserve.
1. Com&any has /een san#tioned !or-ing #a&ita imits /y /an-s.
2. 9orro!ed amount o" #om&any is #assi"ied as a standard asset /y the /an-.
Commer#ia Pa&er is an unse#ured &romissory note issued at a dis#ount. The rate o"
dis#ount is re3uired to /e de#ided /y the issuer and is not reguated.
9e"ore the #om&any issues the CPs it is re3uired to o/tain satis"a#tory #redit rating "rom
an a&&roved #redit rating agen#y. Presenty, "oo!ing #redit rating agen#ies have /een
a&&roving /y *9I "or this &ur&ose.
a. Credit *ating In"ormation (ervi#es o" India Ltd., @C*I(ILA
Inventory Management APEX AUTO LTD.,
/. Investment In"ormation and Credit *ating Agen#y o" India Ltd., @IC*AA
#. Credit Anaysis and *esear#h Ltd., @CA*EA
d. +ITC) *ating India @PA Ltd.,
The minimum #redit rating re3uired is P<1 o" C*I(IL. I" the rating is given /y any other
agen#y, e3uivaent minimum rating !i /e re3uired. The rating so o/tained /y the #om&any
shoud /e #urrent and shoud not have "aen due "or revie!.
3ho !an #n$et #n C.;
+oo!ing &ersons #an invest in the CP
4. Individuas
:. 9an-s
H. Cor&orate 9odies in#or&orated in India
8. Unin#or&orated 9odies
F. Con<resident Indians
G. +oreign Institutiona Investors
Nat%re of a C.;
h. A CP #an /e issued "or the maturity &eriod o" 8 days to one year.
i. A CP has the denomination o" *s. : La-shs and every singe investor shoud invest
minimum *s. : La-hs in CP.
'. Every issue o" CP, in#uding the rene!a, !i /e #onsidered to /e the "resh issue.
-. The amount o" CP sha /e !ithin the overa imit san#tioned /y the 9oard o" Dire#tors. It
#an /e issued a ,stand aone. &rodu#t. 9an-s !i /e "ree to ad'ust the !or-ing #a&ita
imits a"ter #onsidering the CPs issued /y the Com&any.
Inventory Management APEX AUTO LTD.,
It !i not /e out o" &a#e to mention here that CP is not treated as de&osit as &er the &rovisions
o" Se!t#on 6BCA of the Compan#e A!t= 0D67.
.ro!e&%re for #%#ng the C.;
Every #om&any issuing the CP shoud a&&oint a s#hedued /an- as the Issuing and
Paying Agent @IPAA. It !i satis"y it<se" that #om&any has o/tained satis"a#tory #redit rating. It
sha aso veri"y the do#uments su/mitted /y the issuing #om&any and issue a #erti"i#ate that the
do#uments are in order. IPA shoud aso #erti"y that it has vaid agreements !ith the issuing
#om&any.
The issuing #om&any sha arrange to &a#e the CPs on &rivate &a#ement /asis !ith the
inventors. The issuing #om&any sha dis#ose to the &otentia investor its "inan#ia &osition.
A"ter the dea is #on"irmed, the issuing #om&any sha issue &hysi#a #erti"i#ates to the investor.
Investors sha /e given a #o&y o" IPA #erti"i#ate to the e""e#t that the issuing #om&any has a
vaid agreement !ith the IPA and do#uments are in order. Every issue o" CP shoud /e re&orted
to *9I through the IPA !ithin three days "rom the date o" #om&etion o" issue.
A&e% Auto Ltd @Unit IIA has setu& in Te#on Premises so as !e -no! earier that A&e%
Unit II is having ony one #ustomer that is Te#on so "or short distan#e there is no need o" ogisti#
de&artment in A&e% Unit II it is handed /y Pur#hase de&artment in#harge is Parmod (ingh.
Inventory Management APEX AUTO LTD.,
/#nan!#al In$entor' Management
Aready !e sa! a/out Logisti# Inventory Management. Let us see ho! A&e% vauates
the od and re'e#ted sto#-s in "inan#ia terms and aso have a oo- on the inventory ratios.
Val%at#on metho& for Ol& an& Re"e!te& Sto!I;
Ol& Sto!I;
This od sto#- means e%#ess o" materias "rom s&e#i"i# order. As aready vie!ed in
Physi#a Inventory Pro#ess that, a!ays &ur#hase de&artment &ur#hases 17K more than its
order. (o that remained or e%#ess materias are said to /e ,9u""er (to#-.
These Od sto#- are in the "orm o" *a! Materias then vauate it a##ording to &ur#hasing
o" those materias. I" these od sto#- are a"ter +inishing o" &rodu#tion &ro#ess. Then these are
vauating on seing &ri#e o" same &rodu#ts to the #ustomer.
Inventory Management APEX AUTO LTD.,
In easy !ords it #an /e said that i" materias are *a!, then ta-ing as Pur#hasing vaue "or
vauation &ur&ose. I" materias are +inished Goods then ta-ing (eing Pri#e as a vaue "or
vauation o" Od (to#- in Godo!n.
Re"e!te& Sto!I;
Again these are divides into three &arts. *e'e#tion o" *a! Materias i.e., /e"ore sending
to Produ#tion Pro#ess. *e'e#tion o" Materias during the Produ#tion Pro#ess and *e'e#tion o"
Materias a"ter the Produ#tion Pro#ess that is, *e'e#tion o" +inished Goods.
*e'e#tion o" *a! Materias is vauating on Pur#hase vaue o" those materias. *e'e#tion
o" =IP Materias then vauate as Pur#hase Baue .l% its &arty in#urred Costs i-e La/our,
Overhead Costs et#., And "or *e'e#tion o" +inished Goods vauate at Pur#hase Baue and +uy
in#urred Costs as said no!.
+ol&#ng or Or&er#ng Cot
These #osts are every im&ortant in manu"a#turing #om&anies to minimi>e the #ost. This
is not a&&i#a/e to A&e% /y virtue o" its 9usiness a#tivities. 9e#ause, et us have a /road vie! on
statement /y "oo!ing &oints;
? In A&e%, they &ur#hase the materias ony "rom muti&e su&&ier.
? 9e#ause to "u"i the re3uirements in re3uired time imit.
? A&e% orders the materias to su&&iers ony at on#e and a##ording to the s#hedue su&&ier
!i su&&y the materias.
Des, De&ending on (horter order #y#e A&e% #an hod entire sto#- !e /e"ore order starts
and aso A&e% #an have a "u sto#- at a time /e"ore starting &ro#ess o" &rodu#t o" that s&e#i"i#
order.
Inventory Management APEX AUTO LTD.,
EOA
EOL a&&i#a/iity due to the nature o" 9usiness as a/ove said is not &ossi/e.
Reor&er .o#nt;
This is the &oint is aso not having mu#h im&ortan#e /e#ause o" nature o" 9usiness.
-ea& T#me
A&e% &ur#hases materias "rom muti&e su&&ier and /y on s#hedue /asis to su&&y
materias. (o this is aso not a&&i#a/e in this ty&e o" /usiness.
Inventory Management APEX AUTO LTD.,
/#nan!#al Rat#o relate& to In$entor'1
RaG mater#al t%rno$er rat#o;
*a! materia turnover ratio is veo#ity at !hi#h ra! materia #onverted into goods ready
"or sae. I" ra! materia turnover ratio is high then #om&any is e""i#ien#y #onverting into "inished
goods.
+ormua; Materia #onsumed K Average ra! materia
Raw Material Turnover Ratio
Year Raw material consumed (Rs) Avg R.M Ratio
2008 576!8!"22 5#608082 $0.75
2007 #7$22#87# #6$#7266 $0.27
2006 2#077"2#6 $#2002!"0 $.7!
Inventory Management APEX AUTO LTD.,
+orm a/ove gra&h !e #ome -no! that ra! materia turnover ratio is in#reased ra&idy in 1778
"rom 0.84 in 177H to 07.18 "or 1778. Indi#ates that #om&any is #onverting ra! materia into
"inished or semi "inished goods very 3ui#-y
+ol&#ng per#o& of raG mater#al*
It re"ers to the num/er o" days ta-en "or the &rodu#tion unit to #onvert ra!
materia to "inish goods.
+ormua; 2H7 N*a! materia turnover ratio
Ratio
0
2
!
6
8
$0
$2
2008 2007 2006
Years
Ratio
)oding &eriod o" ra! materia
Dear Tota Days *atio Days
177F 2H7 07.8: 22
1778 2H7 07.18 2:
177H 2H7 0.84 17H
Inventory Management APEX AUTO LTD.,
As the ra! materia turnover ratio is in#reasing "orm to 07.18 "or 1778 it indi#ates that "irm is
ta-ing ess days "or #onversion as #om&ared to 177H. In 177H #onversion &eriod !as 17H days
/ut in de#reased to 2: days "or 1778. This is sho!n in a/ove gra&h.
9e"ore 1778 there !as no &rodu#tion &ro#ess they !ere #onverting semi "inished goods
into "inished &rodu#ts hen#e to start their o!n &rodu#tion &ro#ess they hod the ra! materia in
177H
3orI #n .ro!e T%rno$er rat#o*
=or- in &ro#ess turnover ratio is veo#ity at !hi#h =.I.P #onverted into goods ready "or
sae. I" =.I.P turnover ratio is high then #om&any is e""i#ien#y #onverting into "inished goods.
+ormua;
Cost o" &rodu#tion
Average =.I.P
=.I.P turnover ratio
Dear Cost o" &rodu#tion Avg =.I.P *atio
177F F4G,7:4,441 2H,817,871 12.01
1778 :::,7G4,:77 0:,707,248 2H.GF
Raw material holding Period
0
50
$00
$50
200
250
2008 2007 2006
Years
DAYS
R%&
Inventory Management APEX AUTO LTD.,
177H 2H0,007,0G8 G,8::,F2G 28.70
+orm a/ove gra&h !e #ame to -no! that =or- in &ro#ess turnover ratio is de#reasing "rom 28.70
in 177H to 12.01 177F. The ratio !as high in 177H as #om&ared to 1778 and 177F. The ratio !as
28.70. Indi#ates that #om&any is #onverting semi "inished into "inished goods 3ui#-y
+ol&#ng per#o& of 31I1.*
It re"ers to the num/er o" days ta-en "or the &rodu#tion unit to #onvert semi "inished
goods into "inish goods.
+ormua;
2H7
=.I.P turnover ratio
Work in Process Turnover ratio
0
5
$0
$5
20
25
#0
#5
!0
2008 2007 2006
Years
DAYS
Ratio
)oding &eriod o" =.I.P
Dear Tota Days *atio Days
177F 2H7 12.01 0:.:8
1778 2H7 2H.GF G.82
177H 2H7 28.70 G.81
Inventory Management APEX AUTO LTD.,
As the !or- in &ro#ess turnover ratio is in#reasing "orm G.81. in 177H To 0:.:8 "or 177F it
indi#ates that "irm is ta-ing ess days "or #onversion. =hi#h sho!n in a/ove gra&h
/#n#he& goo& t%rno$er rat#o*
+inished goods turnover ratio is veo#ity at !hi#h "inished goods #onverted into "or sae.
I" "inished goods turnover ratio is high then #om&any is e""i#ient.
+ormua;
Cost o" goods sod
Average "inished goods
Holding period of W I P
0
2
!
6
8
$0
$2
$!
$6
$8
2008 2007 2006
Years
DAYS
Ratio
+inished goods turnover ratio
Dear #ost o" goods sod Avg +.G *atio
177F F4G,7:4,441 1H,142,22G 21.2:
1778 :::,7G4,:77 0G,F:F,4F1 18.G:
177H 2H0,007,0G8 07,G47,77F 22.70
Inventory Management APEX AUTO LTD.,
+orm a/ove gra&h !e #ame -no! that "inished goods turnover ratio is de#reasing "rom 22.70 in
177H to 18.G: "or 1778. Indi#ates that #om&any is seing goods itte so!y as #om&ared to
177H /ut it is /it "ast as #om&ared to 177F. =here the ratio "or that &arti#uar &eriod !as 21.2:
de#reased to 00.17 "or 177F it is satis"a#tory. =hi#h sho!n in a/ove gra&h.
In$entor' to !ap#tal emplo'e&*
This ratio indi#ates the reationshi& /et!een the tota #a&itas em&oyed and inventories it
sho!s ho! mu#h #a&ita utii>ed to invest in the inventories other than the other assets. The
norma manu"a#turing "irms have o! ratio o" inventory tota #a&ita em&oyed in the
organi>ation.
+ormua; Inventory K Tota #a&ita em&oyed
inished !oods Turnover Ratio
25
26
27
28
2"
#0
#$
#2
##
#!
2008 2007 2006
Years
DAYS
Ratio
Inventory to #a&ita em&oyed
Dear Inventory
Tota #a&ita
em&oyed Per#entage
177F 0G8,4H:,7HG 270,442,10: H:.:7
1778 010,::F,777 04:,4G1,:GG F2.:4
177H H8,GG4,H12 GF,222,214 HG.04
Inventory Management APEX AUTO LTD.,
9y o/serving a/ove gra&h !e #an say that the "irm investing huge amount in inventories
#om&ared to other assets. It invested F2.:4K o" its #a&ita in inventory in 1778 !here as it
redu#ed to H:.:7K in 177F
In$entor' to !%rrent aet rat#o*
This ratio indi#ates the reationshi& /et!een the inventory and #urrent assets. It sho!s the
&er#entage o" inventory to #urrent assets, !hi#h he&s the organi>ations in de#iding the #urrent
assets &oi#y !hi#h aso a""e#t the i3uidity &osition o" the organi>ation.
+ormua; Inventory / Current assets
Inventory to #urrent asset ratio
Dear Inventory #urrent assets Per#entage
177F 0G8,4H:,7HG 220,204,:74 :G.H7
1778 010,::F,777 128,HF8,HF4 :0.04
177H H8,GG4,H12 008,711,H1: :F.07
Inventor" to capital emplo"ed
0
$0
20
#0
!0
50
60
70
80
"0
2008 2007 2006
Years
P#R$#%TA!#
'()
Inventory Management APEX AUTO LTD.,
The inventory to #urrent assets ratio in the year 177H !as :F.07K and it de#reased to :0.04K in
the year 1778 /ut again it in#reased to :G.H7K in 177F. It sho!s that the "irm investing :G.H7K
o" its investment is "or inventory ony.
In$entor' to total aet*
This ratio indi#ates the reationshi& /et!een the inventory and tota assets. The
signi"i#an#e o" this ratio is it re"e#ts the &ortion the inventory as a &er#entage o" the tota assets,
!hi#h he&s the management de#iding the utii>ation remaining resour#es &ro"ita/y, sin#e the
inventory !i o#- u& the huge "unds and redu#es the &ro"ita/iity o" the organi>ation
+ormua; Inventory N Tota assets
Inventory to tota assets
Dear Inventory Tota assets Per#entage
177F 0G8,4H:,7HG GG7,21G,7F8 0G.G2
1778 010,::F,777 :47,G0H,7FF 11.48
177H H8,GG4,H12 404,G70,124 0H.2F
Inventor" to current asset ratio
!6
!8
50
52
5!
56
58
60
62
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory Management APEX AUTO LTD.,
During the year 177H the rate o" inventory to tota assets !as 0H.2FK it in#reased to 11.48K in
1778. 9ut again it redu#ed to 0G.G2K in 177F. It indi#ates that "irm investing ony 0G.G2K in
inventory out o" tota assets.
In$entor' to GorI#ng !ap#tal*
This ratio indi#ates the reationshi& /et!een inventory to !or-ing #a&ita and it
aso indi#ates the amount to inventory tied u& in the !or-ing #a&ita and it aso sho!s the
e""i#ien#y o" inventory management.
+ormua; Inventory
=or-ing #a&ita
Inventor" to total assets
0
5
$0
$5
20
25
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory to !or-ing #a&ita
Dear Inventory =or-ing #a&ita Per#entage
177F 0G8,4H:,7HG 0GG,24:,012 GG.7:
1778 010,::F,777 04H,7G8,107 F2.17
177H H8,GG4,H12 4H,22F,188 04H.4:
Inventory Management APEX AUTO LTD.,
In the year the ratio !as 04H.4:K in 177H. It de#reased to F2.17K "or 1778 /ut it in#reased it to
GG.7:K in 177F. It indi#ates that "irm investing huge amount in inventory
/IN,INGS*
0. *a! materia turnover ratio is in#reased ra&idy in 1778 "rom 0.84 in 177H to 07.18 "or
1778.
21 As the ra! materia turnover ratio is in#reasing "orm to 07.18 "or 1778 it indi#ates that
"irm is ta-ing ess days "or #onversion as #om&ared to 177H.
2.=or- in &ro#ess turnover ratio is de#reasing "rom 28.70 in 177H to 12.01 177F. The ratio
!as high in 177H as #om&ared to 1778 and 177F.
4.As the !or- in &ro#ess turnover ratio is in#reasing "orm G.81. in 177H To 0:.:8 "or 177F
it indi#ates that "irm is ta-ing ess days "or #onversion
Inventor" to working capital
0
20
!0
60
80
$00
$20
$!0
$60
2008 2007 2006
Years
P#R$#%TA!#
Ratio
Inventory Management APEX AUTO LTD.,
:.+inished goods turnover ratio is de#reasing "rom 22.70 in 177H to 18.G: "or 1778.
Indi#ates that #om&any is seing goods itte so!y as #om&ared to 177H
/ut it is /it "ast as #om&ared to 177F.
H.Com&any is seing goods itte so!y as #om&ared to 177H /ut it is /it "ast as #om&ared
to 177F. =here the ratio "or that &arti#uar &eriod !as 21.2:
8.The inventory to #urrent assets ratio in the year 1778 !as :F.07K and it de#reased to
:0.04K in the year 177F /ut again it in#reased to :G.H7K in 177F. It sho!s that the "irm
investing :G.H7K o" its investment is "or inventory ony.
F.During the year 1778 the rate o" inventory to tota assets !as 0H.2FK it i#reased to
11.48K in 177F. 9ut again it redu#ed to 0G.G2K in 177G. It indi#ates that "irm investing
ony 0G.G2K in inventory out o" tota assets.
G.In the year the ratio !as 04H.4:K in 177H. It de#reased to F2.17K "or 1778 /ut it
in#reased it to GG.7:K in 177F. It indi#ates that "irm investing huge amount in inventory.
07.As the "inished goods turnover ratio is in#reasing "orm 07.F8 in 1778 to 01.FH "or 177F
it indi#ates that "irm is ta-ing ess days "or sae. In 177F #onversion &eriod !as 01.FH days
/ut in de#reased to 00.17 "or 177F it is satis"a#tory.
Inventory Management APEX AUTO LTD.,
SUGGESTIONS*
a> +rom the "indings it is #ame to -no! that in the year 177H the num/er o" days "or
hoding *a! materia is more, it is not good "or the #om&any /e#ause it eats
unne#essary investment. To avoid this &ro/em the "oo!ing &oints !i he&.
• Pur#hase *a! Materias at the time !hen the sto#- rea#hes the minimum eve.
• The &ur#hases shoud not #ross the Ma%imum imit other!ise the sto#- -e&t in
stores ide.
• Luantity shoud /e ordered as &er the demand. =e #an assume the demand "or the
goods "rom &ast e%&erien#e.
• =e #an have more *a! materias !hi#h are im&orted "rom other #ountries /ut #arry
reasona/e sto#-s !hi#h are avaia/e o#ay.
b> I" !e &ur#hase ess 3uantity o" materias at a time it !i redu#e the #arrying #ost
/ut in#reases the ordering #ost and vise versa. There"ore o&timum ordering 3uantity
is ne#essary, !hi#h minimi>es the #ost.
Inventory Management APEX AUTO LTD.,
!> The #om&any shoud maintain a sa"ety eve and aso reordering &oint so that they
#ome to -no! at !hat time they shoud order "or the su&&y o" materia and need
not to su""er "rom short "a o" re3uired materia.
CONC-USION
A"ter the study, !e #an #ame to a #on#usion that, e""e#tiveness o" inventory management shoud
im&rove in a the as&e#ts, hen#e the industry #an sti strengthen its &osition /y oo-ing into the
"oo!ing.
• The inventory shoud /e "ast moving so that !arehouse #ost #an /e redu#ed.
• The "inished goods have to /e dis&at#hed in "easi/e time as soon as manu"a#turing
is #om&eted.
• O&timum order 3uantity shoud /e maintained, hen#e #ost #an /e minimi>ed.
• Pro&er inventory #ontro te#hni3ues are em&oyed /y the inventory #ontro
organi>ation !ithin the "rame!or- o" one o" the /asi# modes i-e A9C, )ML and
BED et#.
Inventory Management APEX AUTO LTD.,
(I(IIOGRA.+Y
(OO@S
• +inan#ia Management ; I.M.Panday
• Produ#tion Management ; J. Ash!ata&&a
3E(SITES
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Inventory Management APEX AUTO LTD.,
doc_209944580.doc