OPERATIONS MANAGEMENT II

A STUDY ON INVENTORY MANAGEMENTPRACTICE SHREE AUTOMOBILES (HONDA) GROUP # 2

PRESENTED BY:

Ayan Chatterjee 2011050 Deepa Pillai 2011062 Dhairya Gada 2011072 Haritima Wadhwani 2011087

Shree Automobiles:
Is a Chain retail Sales & Service Center for the Honda Two-Wheelers division. Started 2 years ago with Initial Investment of Rs.10 Lacs. CEO: Mr. Ajay V. Deshmukh. Location: Katol, Nagpur. Service Capacity: 15 Two-Wheelers per day. Working :9 hrs per Day. 300 days pa. Saturdays off.

Existing Layout of Service Centre cum Showroom

INVENTORY

Inventory Management Practice

The Model Followed by Shree Automobiles is Fixed Time Period Model where new inventory is ordered after every 30 days so that the inventory of oil bottle reaches 400 to avoid stock out. The inventory mainly consist of engine oil, brake liners, nut bolts, grease, etc. less significant inventory like- engine fan, silencers, tyre, horns, etc. Manual Inventory auditing after every 30 days.

 Time between Orders: Oil, Brake liners and Nut bolts : 30 days Engine fan, silencer, Tyres, New battery etc: JIT
Safety Stocks: Oil Bottle: 50 Brake liner: 15 lead time (days) =2 current inventory =50 time between orders (days) =30

Fixed Time Period Model

Suggestions for Improvement

Inventory Management
1. Selective Inventory Control: The Organization can use the VED analysis:

Vital: Engine oil and nut bolts Essential: brake liners Desirable: Other inventory like fan, silencers etc

2. Ordering quantity: The ordering quantity for oil is 350 bottles per month as per our calculations.
Assumption: Service Level (z) = 90% = 1.645 Calculated figures: Average Demand per day =12 No of working days in a month =25 Total Demand per month =300 Service Level (z) at 95% =1.645 Variation in Demand =3 Standard Deviation =1.73

Order Qty = Avg. demand + Safety Stock - Inventory on hand Order Quantity (oil bottles) = 350

3. Application of computers: The company uses Manual Auditing every 30 days. If applicable they can opt for computer technology which can be applied to increase the efficiency of Inventory Management.

Other Improvements

Average demand on Monday Average demand on Tuesday Average demand on Wednesday Average demand on Thursday Average demand on Friday Average demand on Saturday Average demand on Sunday

Average Demand 12.5 10.5 10.8 11.5 12 0 15

Other Improvements Contd

Expertise employee for a particular work. Remove bottleneck in the process Sequential flow of activity to ease the process of servicing.

Conclusion:
Most of the industrial units in India have adopted certain efficient techniques as VED analysis for controlling their inventories. With the advent of electronic data processing, better selective inventory control measures are available, the adoption of which will lead to better control of inventory at a reduced amount of investment. The just in-time inventory control technique can be implemented only after improving the work environment.

THANK YOU !!!