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PRODUCTION & OPERATIONS

MANAGEMENT

Project Title: Analysis of a wholesale


grocery store

Items: Sugar, Refine oil, Potato,


Onion,
Coconut

Group Members:
Priyanka
Kalwar

14202145
Ankit Agrawal

14202151
Chandrakant
Kumar

14202161

Shrabani
Choudhary

14202177
Bhagyashree

Mohanty

14202181

BACKGROUND OF THE BUSINESS


The project pertains to a retail cum wholesale grocery store named Gopiram Banwarilal
Ltd. which is situated in the Sonepur district of Odisha. The firm has been named after the
proprietor Gopiram Banwarilal.
Talking about Sonepur which is our research destination, the place became a district in 1993
and is popularly known as The city of Temples. The name can be accredited to the presence
of 108 temples in Sonepur district .The count increases to 160 if we add the newly built 50
temples .The presence of large no. of temples makes the place boast of a rich cultural heritage
passed down through generation. The average population of Sonepur district is nearly 6 lakh
as per the census report of 2011.

INSIGHT INTO THE LIFE OF THE PROPRIETOR


The firm was founded by Gopiram Banwarilal as early as 1968. At that time, the firm was
dealing mostly in herbs (Jadi Buti) accompanied by grocery items in a meagre amount. As
time passed on Ramesh Kumar Agrawal stepped in his fathers shoes, to take up the
responsibility of the business. Backed by new and innovative ideas Ramesh Kumar Agarwal
tried to extend his business.
Therefore he shut down the herbs business and entered the market in the grocery business.
His perseverance finally bore fruit and the business grew up. Yes, there were ups and downs
in the business but he never gave hope .All the goods were sold mainly in the local market.

GROWTH OF THE BUSINESS


In 1981 a second hand jeep was purchased for procuring goods which helped them cover a
larger market segment both in terms of purchase of goods as well as in terms of distribution
network. The grocery items were brought from Bolangir and sold in Sonepur market.
With the passage of time, Sonepur was announced as a district and hence there was a
migration to this place from the neighbouring villages .This led to a rapid development of the
district a large no. of retail shops opened in the area in a disorganised way which gradually
took the form of a market complex. Due to the increase in population the business grew at a
rapid rate and so did the competition but the firm was always a step ahead of its competitors
and thus was able to maintain the market share at 35-40% .with this increase there was a need
for better logistics and hence 2 more vehicles were bought to cover the areas .The
procurement of goods was extended further to Sambalpur, Barpali, Bargarh, Boudh etc.
Since it was not possible to calculate the inventory level of each and every product, in this
project we focused mainly on the following items:

1)
2)
3)
4)
5)

Refine oil
Sugar
Potato
Onion
Coconut

REFINE OIL
BASIS
PROCURED FROM

BARGARH

EOQ

150 TINS (15*150)

AVERAGE COST per TIN

RS 900 ( DEPENDS ON THE MARKET)


*(The market rate is subject to fluctuation due to rise
in prices, govt. policies, taxes etc.)

TRANSPORTATION COST

RS 3000

WAREHOUSE COST (INVENTORY)

RS 1 per TIN

AVG SELLING PRICE per TIN

RS 950

AVG TURNOVER

40 TINS

STOCK TURNOVER

WITHIN 3 TO 4 DAYS

STOCK RECEIVED WITHIN

1 DAY

UNLOADING LABOUR COST

RS 1.5 per TIN

RE-ORDER POINT

40 TINS

ORDERING COST

RS 2 (TELEPHONE CHARGES)

OTHER EXPENSES (DAMAGE DUE TO


LEAKAGE OR UNEXPECTED LOSS,
DISCOUNT)

RS 5 per TIN

PROFIT

950-(900+20+1+1.5+2+5) = 20.5 per TIN

SUGAR
BASIS
PROCURED FROM

BALANGIR, RAIPUR

EOQ

16 TONNE, (320*50)

AVERAGE DELIVERY COST per 50 KG


OF PKT.

RS 1350 ( DEPENDS ON MARKET)

TRANSPORTATION COST

AS RECEIVED IN DEELIVERY PRICE SO IT IS IGNORED

WAREHOUSE COST (INVENTORY)

RS 1 per 50 KG PKT.

AVG SELLING PRICE per PKT

RS 1390

AVG TURNOVER (50 KG)

50 PKTS

STOCK TURNOVER

WITHIN 6 TO 7 DAYS

STOCK REACHES WITHIN

2 DAYS FROM WB, WITHIN 1 DAY FROM SAMBALPUR


& BALANGIR

UNLOADING LABOUR COST

RS 3 per PKT

RE-ORDER POINT

100 PKTS.

ORDERING COST

RS 2 (TELEPHONE CHARGES)

OTHER EXPENSES (DAMAGE DUE TO


RAT OR UNEXPECTED LOSS,
DISCOUNT)

RS 2 per PKT

PROFIT

1390-(1350+1+3+2) = 34 per PKT.

*(The market rate is subject to fluctuation due to rise


in prices, govt. policies, taxes etc.)

POTATO
BASIS
PROCURED FROM

WESTBENGAL(MEDINIPUR,
BALANGIR,SAMBALPUR)

EOQ

16 TONNE (320*50) FOR WB , 12 TONNE (240 *


50) FOR SAMBALPUR, BALANGIR

AVERAGE COST per 50 KG OF PKT.

RS 250 per PKT FROM WB , 300perPKT FROM


SAMBALPUR & BALANGIR ( DEPENDS ON
MARKET)
*(The market rate is subject to fluctuation due
to rise in prices, govt. policies, taxes etc.)

TRANSPORTATION COST

10000 FROM WB, 4000 FROM SAMBALPUR &


BALANGIR ( DEPENDS UPON MARKET)

WAREHOUSE COST (INVENTORY)

RS 1 per 50 KG PKT.

AVG SELLING PRICE per PKT

RS 320 (FROM WB) 350 (FROM SAMBALPUR &


BALANGIR)

AVG TURNOVER (50 KG)

60 PKTS

STOCK TURNOVER

WITHIN 5 TO 6 DAYS ( IF 16 TONNE)

STOCK REACHES WITHIN

2 DAYS FROM WB, WITHIN 1 DAY FROM


SAMBALPUR & BALANGIR

UNLOADING LABOUR COST

RS 3 per PKT

RE-ORDER POINT

130 PKTS.(FOR WB), 70 PKTS (FOR SAMBALPUR,


BALANGIR)

ORDERING COST

RS 2 (TELEPHONE CHARGES)

OTHER EXPENSES (DAMAGE DUE TO RAT


OR UNEXPECTED LOSS, DISCOUNT)

RS 2 per PKT

PROFIT

320-(250+31+1+3+2) = 33 per PKT. (FROM


WB)

350-(300+16.5+1+3+2) = 27.5 per PKT (FROM


SAMBALPUR & BALANGIR)

ONION
BASIS
PROCURED FROM

BALANGIR,PATNAGARH

EOQ

50 PKTS (50*50 KG)

AVERAGE COST per PKT

RS 530 ( DEPENDS ON MARKET)


*(The market rate is subject to fluctuation due to
rise in prices, govt. policies, taxes etc.)

TRANSPORTATION COST

RS 1800

WAREHOUSE COST (INVENTORY)

RS 1per PKT

AVG SELLING PRICE per PKT

RS 590 per PKT

AVG TURNOVER

10 PKTS

STOCK TURNOVER

WITHIN 4 TO 5 DAYS

STOCK REACHES WITHIN

1 DAY

UNLOADING LABOUR COST

RS 3 per PKT

RE-ORDER POINT

20 PKTS

ORDERING COST

RS 2 (TELEPHONE CHARGES)

OTHER EXPENSES (DAMAGE DUE TO


RAT OR UNEXPECTED LOSS, DISCOUNT)

RS 3 per PKT

PROFIT

590-(530+36+1+3+3)= RS 17

COCONUT
BASIS
PROCURED FROM

BALANGIR, PATNAGARH

EOQ

100 PKTS (100*50 pcs)

AVERAGE COST per PKT

RS 720 ( DEPENDS ON MARKET)


*(The market rate is subject to fluctuation
due to rise in prices, govt. policies, taxes
etc.)

TRANSPORTATION COST

RS 3500

WAREHOUSE COST (INVENTORY)

RS 1 per PKT

AVG SELLING PRICE per PKT

RS 775 per PKT

AVG TURNOVER

20 PKTS

STOCK TURNOVER

WITHIN 4 TO 5 DAYS

STOCK REACHES WITHIN

1 DAY

UNLOADING LABOUR COST

RS 3 per PKT

RE-ORDER POINT

30 PKTS

ORDERING COST

RS 2 (TELEPHONE CHARGES)

OTHER EXPENSES (DAMAGE DUE TO DRY


COCONUT OR UNEXPECTED LOSS, DISCOUNT)

RS 3 per PKT

PROFIT

775-(720+35+1+3+3) =13

DEMAND FORECASTING

For forecasting the demand, the previous sales are taken into account. In
addition to it, special occasions like festivals, sudden price rise or fall,
expected shortage of the product in the market are few other cases where
the sales may fluctuate from the natural sales level. Overall the trend
analysis method is followed to forecast the demand.

CONCLUSION
The project was a practical experience for all of us. We got to understand
how the forecasting of demand is done at the ground level. We got a first
hand experience on how the inventory is managed and the operations of
the business are handled. We got to apply our theoretical concepts
pertaining to inventory management which helped us to gain a better
understanding of the topic.
We got to know that every firm follows the inventory management
principle. Its just that they do it with practical experience. Overall it was a
wonderful learning experience.