Professional Documents
Culture Documents
PROJECT REPORT
ON
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
BATCH 2021-2023
INSTITUTE CERTIFICATE
(To be printed on Institute Letterhead only)
CERTIFICATE
This is to certify that Mr./Miss/Mrs.______________________________________ MBA
student of Sharadchandra Pawar institute of management & research (spimr), someshwarnager
has successfully completed his/her Summer Internship Project titled
______________________________________________________________________________
______________________________________________________________________________
during the period from ___________ to ___________.
During the project he/she was found sincere and obedient.
Place: - Someshwarnager
Date: - { PHUKE ABHIJIT SUNIL}
ACKNOWLEDGEMENT
1. CHAPTER-1 : INTRODUCTION
2. ORGANISATIONAL PROFILE
3. CHAPTER-II : REVIEW OF LITERATURE 07-38
4. CHAPTER-III 68-88
5. CHAPTER-IV 89-93
FINDING
CONCLUSIONS
SUGGESTIONS
BIBLIOGRAPHY
INVENTORY MANAGEMENT
.Stock, stock, beautiful stock
Piles on the fixtures and more in the dock
some of it ancient and some of it new
Alas, and tomorrow another lot’s due.
The couplet beautifully sums up the predicament of all those who are connected with
the stock (inventory). What is this inventory? What are its functions? What can be done to
minimize this inventory? These and other relevant issues have been discussed in this chapter.
Meaning and Definition
The term inventory had been defined by several authors. The more popular of them
are: „the term inventory includes materials – raw, in process, finished packaging, spares and
others stocked in order to meet an unexpected demand or distribution in the future‟.
Another definition of inventory is that it „can be used to refer to the stock on hand at a
particular time of raw materials, goods-in-process of manufacture, finished
products, merchandise purchased for resale, and the like, tangible assets which can be seen,
measured and counted. In connection with financial statements and accounting records, the
reference may be to the amount assigned to the stock of goods owned by an enterprise at a
particular time‟.
Yet another definition is that the term inventory includes the following categories of
items:
1. Production Inventories: Raw material, parts and components which enter the firm‟s
Product in the production process. These may consist of two general types: (a) special
Items manufactured to company specifications, and (b) standard industrial items
Purchased.
2. MRO Inventories: maintenance, repair, and operating supplies which are consumed in the
Production process, but, which do not become part of the product.(e.g. lubricating oil, soap,
machine repair parts).
3. IN-Process Inventories: Semi Finished Products Found At Various Stages In The
Production operation.
4. Finished Goods Inventories: Completed products ready for shipment.
Merchants meant for resale is not included in the above classification of inventories.
The exclusion of merchandise is justified on the ground that a manufacturing establishment
for their conversion into finished products. A trading concern, however, buys finished goods
for resale. The present study is concerned with industrial establishments and not with trading
concerns.
INVENTORY MANAGEMENT AND CONTROL
Because of high costs involved in inventories, their proper management and control
assume considerable importance. In fact, the management of inventory is given such an
importance, that, it is often treated synonymous with materials management. Literature wise,
there are more number of books and articles written on inventory management than on
materials management.
Inventory management involves the „development and administration of policies,
systems and procedures, which will minimize total costs relative to inventory decisions and
related functions such as customer service requirements, production scheduling, purchasing
and traffic‟. Viewed in that perspective, inventory management is brad in scope and affects a
great number of activities in a company‟s organization. Because of these numerous
interrelationships, inventory management stresses the need for integrated information flow
and decision making, as it relates to inventory policies and overall systems.
Inventory control, on the other hand, is defined in a narrower
sense than inventory management and pertains primarily to the administration of established
policies, systems and procedures. For example, the actual steps taken to maintain the stock
levels or stock records refer to inventory control. Factors influencing inventory management
and control
Several factors influence inventory management and control. The principal effects of
these factors are reflected most strongly in the levels of inventory and the degree of control,
planned in the inventory control system. The factors include type of product, type of
manufacture, volume of output and others.
Benefits of inventory management and control
Proper management and control of inventories will result in the following benefits to
an organization:
(1) Inventory control ensures an adequate supply of materials and stores, minimizes
Stock-outs and shortages and avoids costly interruptions in operations.
(2) It keeps down investment in inventories, inventory carrying costs and
Obsolescence losses to the minimum.
(3) It facilitates purchasing economies through the measurement of requirements on
The basis of recorded experience.
(4) It eliminates duplication in ordering or in replenishing stocks by centralizing the
Source from which purchase requisitions emanate.
(5) It permits a better utilization of available stocks by facilitating inter-department
Transfers with in a company.
(6) It provides a check against the loss of materials through carelessness or pilferage.
(7) It facilitates cost accounting activities by providing a means for allocating
Material costs to products, departments or other operating accounts.
(8) It enables the management to make cost and consumption comparisons between
Operations and periods.
(9) It serves as a means for the location and disposition of inactive and obsolete items
Of stores.
(10) Perpetual inventory values provide a consistent and reliable basis for preparing
Financial statements.
Inventory Control Techniques
Every industry on average spends 70% on raw materials (inventory). Therefore there
is a need to know the raw material cost and also there is great importance to understand the
inventory management system of this industry.
The study helps a log to various departments to take steps to control the inventory
process. In this competitive business world each and every business organization need
inventory management system for determining what to order, when to order, where and how
much to order so that purchasing and storing costs are the lowest possible without affecting
production and sales. Thus, inventory management control incorporates the determination of
the optimum size of the inventory-how much to be order and when after taking into
consideration the minimum inventory cost.
The overall inventory management includes design and inventory control organization with
proper accountability establishing procedure for inventory handling disposal of scrap,
simplification, standardization and codification of inventories, determining the size of
inventory holdings, maintaining record points and safety stocks, economic order quantity,
EOQ analysis and VALUE analysis and finally framing an INVENTORY MANUAL.
1. To study the inventory management of the Morrero Foods Pvt Ltd, For the
past few years.
2. To analyze this Inventory management with the help of Inventory Analysis as a
principal tool.
3. To evaluate the performance of the company on the basis of these Analysis.
4. To find the trends in figures for the past years.
SCOPE OF STUDY:
The scope of study is limited to collecting the financial data published in the
annual reports of the company with reference to the objectives stated above and an analysis
of the data with a view to suggest favorable solutions to the various problems related to
Inventory Control Management.
This particular topic is selected to the Inventory Control Management is recent
years. The study is conducted to evaluate the performance of the company with reference to
inventory control management. The project is aimed at studying by means of developing
effective „Inventory Control Management ‟
RESEARCH METHODOLOGY
Registered Address Plot No 28/2, Shop No. 1&2, Soham Park Bhigwan
Road, MIDC, Baramati Pune Pune MH 413133 INDIA
Key Customer 1. Mother dairy Limited
2. Gopalji dairy.
3. Tirumala Tirupati Devasthan- Tirupati
4. Hindustan foods Ltd.
5. Vadilal Industries Ltd.
Director Details
The ability to establish a clear vision, in being proactive with your investments, in
being timely with your undertakings , in being excellent in your execution.
Mission:
High quality, crafted precision, product freshness, careful selection of the finest raw materials,
respect and consideration for our customers: these are Morrero‟s “key words” and values which
have helped make its confectionery well-known and loved by millions of consumers all over the
world. Its products are the result of innovative ideas, and are therefore often inimitable, despite
being widely distributed, and have become part of the collective memory and customs of many
countries, where they are often considered true cultural icons.
REVIEW OF LITERATURE
Inventory is the stock of goods a company uses as raw materials for the process of
production. So there is no doubt in the fact that purchasing inventory - the raw materials - is
pretty much a certainty for the business to operate. There are two basic schools of thought
governing inventory purchase. You can purchase a high amount, fewer times over a year,
avail the economies of scale and then store it in your warehouse. The disadvantage here is
that the company will face warehousing costs, risks of spoilage and wastage and the risk of a
fall in projected demand and therefore a loss. Alternatively, you can buy fewer amounts;
reduce the risk of loss but which means that you have to make your trip to the market more
often. The inventory turnover is the financial management tool which helps the finance
manager establishes the way things stand presently and if there needs to be a change in the
way the company is going about with its policy.
Explaining Inventory Turnover:
The term inventory turnover goes by a number of names like inventory turns, stock turns,
stock turnover, depending on which part of the world you live in. But the basic premise of the
concept remains the same: to find out how many times the inventory 'turns over' within a
specified period. The specified period is a year. Turning over means how many times it
comes into the warehouse of the business and leaves it for the process of production. This
ratio is calculated with the turnover formula in days which supplies the details regarding the
stock turnover.
If the turnover ratio is high, which means that your policy involves buying more times over a
period and consuming, there are a chain of events associated. Purchasing inventory involves
two other costs other than the cost of purchase itself: the cost of holding the inventory
(warehousing) and the cost of delivery. So if you buy less inventory, more times a year, then
you incur a higher delivery cost for the period, because you have to go fetch the stuff a lot
more times. At the same time, you need not have a pretty big warehouse and hence that cost
is lower. Thirdly, having a low inventory means reduced risk of spoilage and wastage and
that lesser company money is locked up in the process.
Purchasing more inventory means reduced aggregate delivery cost since the shipment
perhaps comes only once or twice a year. Warehousing costs will be higher because there is a
lot more stuff to store and hence needs a lot more space. And while there are chances of
losses due to spoilage and the money is locked up, this can be compensated for by the
benefits of economies of scale.
So the desired level of turnover really depends on the company policies. If the business uses a
bulk of foreign made raw materials in its production, it makes little sense to order a tiny
shipment every week or month. Then again, if the raw materials are like to be spoiled, then
there is no option trying to store them for a longer time.
The investment in inventories constitutes the most significant part of current assets / working
capital in most of the undertakings. Thus, it is very essential to have proper control and
management of inventories.
The purpose of inventory management is to ensure availability of materials in
sufficient quantity as and when required and also to minimize investment in inventories.
Meaning and Nature of Inventory:
In accounting language, inventory may mean the stock of finished goods only. In a
manufacturing concern, it may include raw materials, work- in – progress and stores etc.
Inventory includes the following things:
Raw Material: Raw material from a major input into the organization. They are
required to carry out production activities uninterruptedly. The quantity of raw
materials required will be determined by the rate of consumption and the time
required for replenishing the supplies. The factors like the availability of raw
materials and Government regulations etc., too affect the stock of raw materials.
Work in progress: The work in progress is that stage of stocks which are in between
raw materials and finished goods. The quantum of work in progress depends upon the
time taken in the manufacturing process. The quantum of work in progress depends
upon the time taken in the manufacturing process. The greater the time taken in
manufacturing, the more will be the amount of work in progress
Consumables: These are the materials which are needed to smoother the process of
production but they act as catalysts. Consumables may be classified according to their
consumption add critically. Generally, consumable stores doe not create any supply
problem and firm a small part of production cost. There can be instances where these
materials may account for much value than the raw materials. The fuel oil may form a
substantial part of cost.
Finished goods: These are the goods, which are ready for the consumers. The stock
of finished goods provides a buffer between production and market, the purpose of
maintaining inventory is to ensure proper supply of goods to customers.
Spares: The stock policies of spares fifer from industry to industry. Some industries
like transport will require more spares than the other concerns. The costly spare parts
like engines, maintenance spares etc., are not discarded after use, rather they are kept
in ready position for further use.
All decisions about spares are based on the financial cost of inventory on such spares
and the costs that may arise due to their non – availability.
BENEFITS OF HOLDING INVENTORIES
Although holding inventories involves blocking of a firm‟s and the costs of
storage and handling, every business enterprise has to be maintain certain level of
inventories of facilitate un – interrupted production and smooth running of business.
In the absence of inventories a firm will have to make purchases as soon as it
receives orders. It will mean loss of time and delays in execution of orders which
sometimes may cause loss of customers andbusiness.
A firm also needs to maintain inventories to reduce ordering cost and avail
quantity discounts etc.
There are three main purpose of holding inventories.
The transaction motive: This facilitates continuous production and timely
execution of sales order.
1. The precautionary motive: Which necessitates the holding of inventories
formeeting the unpredictable changes in demand and supplies of materials
2. The speculative motive: Which induces to keep inventories for taking
advantage of price fluctuations, saving in re–ordering costs and quantity
discounts
RISK AND COSTS OF HOLDING INVENTORIES
b) Re – ordering Level:
When the quantity of materials reaches at a certain figure then fresh order is sent to
get materials again. The order is sent before the materials reach minimum stock level.
Re – ordering level is fixed between minimum level maximum level.
c) Maximum Level:
It is the quantity of materials beyond which a firm should not exceeds its stocks. If the
quantity exceeds maximum level limit then it will be over – stocking.
Overstocking will mean blocking of more working capital, more space for storing the
materials, more wastage of materials and more chances of losses from obsolescence.
Maximum stock level – Reordering Level + Reorder Quantity – (Maximum
Consumption x Minimum reorder period)
d) Danger Stock Level:
It is fixed below minimum stock level. The danger stock level indicates emergency of
stock position and urgency of obtaining fresh supply at any cost.
Danger Stock level = Average rate of consumption x emergency delivery time.
e) Average Stock Level:
This stock level indicates the average stock held by the concern.
Average stock level = Minimum stock level + ½ x reorder quantity.
2) Determination of Safety Stocks:
Safety stock is a buffer to meet some unanticipated increase in usage. The
demand for materials may fluctuate and delivery of inventory may also be delayed in
such a situation the firm can be facing a problem of stock out.
In order to protect against the stock out arising out of usage fluctuations, firms
usuallymaintain some margin of safety stocks.
Two costs are involved in the determination of this stock that is opportunity
cost of stock outs and the carrying costs.
If a firm maintains low level of safety frequent stock outs will occur resulting
into the larger opportunity costs. On the other hand, the larger quantity of safety
stocks involves carrying costs.
3) Economic Order Quantity (EOQ):
The quantity of material to be ordered at one time is known as economic
ordering quantity.
This quantity is fixed in such a manner as to minimize the cost of ordering
and carrying costs.
Total cost material = Acquisition Cost + Cost + Carrying Costs + Ordering
Cost.
Carrying Cost:
It is the cost of holding the materials in the store.
Ordering Cost:
It is the cost of placing orders for the purchase of
materials. EOQ can be calculated with the help of the
following formula EOQ = 2CO / I
Where C = Consumption of the material in units during the year
O = Ordering Cost
I = Carrying Cost or Interest payment on the capital.
4) A – B – C – Analysis: (Always better control analysis):
Under A – B – C Analysis. The materials are divided into 3 categories viz., A, B and
C.
Almost 10% of the items contribute to 70% of value of consumption and this
category
is called „A‟ category.
About 20% of the items contribute about 20% of value of category „C‟
covers about 70% of items of materials which contribute only 10% of value of
consumption.
5) VED Analysis: (Vitally Essential Desire)
The VED analysis is used generally for spare parts. Spare parts classified as Vital (V),
Essential (E) and Desirable (D).
The vital spares are a must for running the concern smoothly and these must be stored
adequately. The „E‟ type of spares is also necessary but their stocks may be kept at low
figures. The stocking of „D‟ type spares may be avoided at times. If the lead time of these
spares is less, then stocking of these spares can be avoided.
6) Inventory Turnover ratio:
Inventory turnover ratios are calculated to indicate whether inventories have
beenused efficiently or not.
The inventory turnover ration also known as stock velocity is normally
calculated as sales / average inventory of cost of goods sold / average inventory.
Inventory conversion period may also be calculated to find the average time
taken forclearing the stocks. Symbolically.
Inventory Turnover Ratio = Cost of goods sold
And
,
Inventory conversion period = Days in a year
The inventories should first be classified can then code numbers should be assigned
for their identification. The identification of short names are useful for inventory
management not only for large concerns but also for small concerns. Lack of proper
classification may also lead to reduction in production.
Generally, materials are classified accordingly to their nature such as construction
materials, consumable stocks, spares, lubricants etc. After classification the materials are
given code numbers. The coding may be done alphabetically or numerically. The later
method is generally used for coding.
The class of materials is assigned two digits and then two or three digits are assigned
to the categories of items divided into 15 groups. Two numbers will be category of materials
in that class.
The third distinction is needed for the quality of goods and decimals are used to note
this factor.
8) Valuation of inventories – Method of valuation:
FIFO method
LIFO method
Base Stock method
Area of improvement:
Inventory management in India can be improved in various ways. Improvements
could be affected through.
Effective Computerization: Computers should not be used merely for accounting purpose
but also for improving decision making.
Review of Classification: ABC and FSN classification must be periodically
reviewed. Improved Coordination: Better coordination among purchase,
production, marketing andfinance departments will be help in achieving greater
efficiency in inventory management.
Development of long term relationship:
Companies should develop long term relationship with vendors. This would help in
improving quality and delivery.
Disposal of obsolete / surplus inventories:
Companies should set benchmarks with global competitors and use ideals like JIT to
improve inventory management.
Inventory cost – an overall view:
Introduction:
In financial parlance, inventory is defined as the sum of the value of the raw
materials, fuels and lubricants spare parts maintenance consumable semi – processed
materials and finished goods stock at any giving point of time. The operational definition of
inventory would be amount of raw materials, fuel and lubricants, spare parts and semi –
processed materials to be stock for the smooth running of the plant / industry.
Need of Inventory:
Inventories are maintained basically for the operational smoothness which they can be
affected by uncoupling successive stages of production, whereas the monetary value of the
inventory serves as a guide to indicate the size of the investment made to achieve this
operational convenience. The materials management departments‟ primary function is to
provide this operational convenience with a minimum possible investment in inventories.
Materials department is accused of both stock outs as well a large investment in inventories.
The solution lies in exercise a selective inventory control and application of inventory control
techniques. Inventories build to act as a cushion between supply and demand. It is sufficient
to take care of the requirements of demand till the next supply arrives. It is sufficient to take
care of probable delays in supply as well as probable variations in demand.
The size of the inventory depends upon the factors such as size of industry internal
lead time for purchase, supplier‟s lead time, vendor relations availability of the materials,
annual consumption of the materials. Inventory coat can be controlled by applying Modern
Techniques viz., ABC analysis, SDE, ESN, HMC, VED etc. These techniques can be used
effectively with the help of computerization.
Although the prime consideration in the valuation of inventories is cost, there are a
number of generally accepted methods of determining the cost of inventories at the close of
an accounting period. The most commonly used methods are first – in first out (FIFO)
average, and last – in first – out (LIFO). The selection of the method for determining cost for
inventory valuation is important for it has a direct bearing on the cost of goods sold and
consequently on profit. When a method is selected, it must be used consequently and cannot
be changed for year to year in order to secure the most favorable profit for each year.
III. There are only moderate fluctuations in the prices of materials or goods
purchased.
IV. Materials are easily identifiable as belonging to a particular purchase lot.
A very useful method of valuing inventories is at a standard cost. With a standard cost
system is no need of spending a great deal of time and money tracing unit cost through
perpetual inventory record.
PURCHASE DEPARTMENT
ORDER PROCESSING FORM
Material
Sl. Indent
Code Description Size Qty 1 2 3 4 5 6 Remarks
No. Ref
No.
Examine order processing from with decide the sub – contractor to whom
purchase order to be placed.
PURCHASE DEPARTMENT
PURCHASE ORDER
Indent Item
Sl. No. Description Qty Rate Unit Amount
No. Code
PURCHASE DEPARTMENT
ACTIVITY: IMPORTS:
FLOW CHART:
Receipt of indents for import items from stores department.
Enter price and other terms of the quotations received from overseas supplier in
Examine order processing form and decide the sub – contractor to whom purchase
order to be placed.
Prepare purchase order after finalization of price and other technical terms
mentioning the following details.
1) Material code
2) Indent number
3) Material specification & part number
4) Quantity
5) Rate
6) Payment
7) Insurance and other terms and conditions.
Send the prepared purchase order to head (purchase) and competent authority for
approval.
Send the purchase order to overseas supplier.
Send the purchase order copies to stores and concerned departments.
Prepare IC documents and submit to bank for onward transmission to overseas
supplier.
Receive shipping documents from overseas supplier and send same to clearing
agents for collection of the material.
STORES DEPARTMENT
STORES DEPARTMENT
STORES DEPARTMENT
STORES DEPARTMENT
ACTIVITY: EXCISE GATE PASSES
Sending duplicate for transport copy of excise invoice from suppliers delivery
Duplicate for transport copy of excise invoice over to bills section for sending the
Corresponding with supplier. If the Excise Invoice is not found with delivery
challans.
STORES DEPARTMENT
= √ 2 * 350000 *992.90
1935.22 * 200
= 21.53(tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORDERING COST
C = PURCHASING COST
I = INVENTORY CARRING CHARGES.
= 17500000+27000000+6300000
= 86792728(CRORES)
FOR THE YEAR 2019 -2020
Sr. No Item Total Avg Qty Per Purchasing Od Ct Inventory Ct
Qty Month Cost
1. A1NKOS-7025 225 19 12.83 27.1 2.59
2. A1NKOS-7026 50,300 325 13.71 28.8 2.69
3. A1NKOS-7073 56,350 211 14.89 30.93 2.75
4. A1NKOS-7122 65,500 339 16.08 32.82 2.72
5. A1NKOS-7123 2,375 264 23.33 45.77 3.23
6. A1NKOS-7152 1,254 2718 10.48 23.52 2.67
7. A1NKOS-7177 1,5475 5589 7.95 18.09 2.2
8. A1NKOS-7178 56,350 6261 17.72 35.32 1.82
9. A1NKOS-7179 65,500 7278 18.11 36.04 1.85
10. A1NKOS-7181 2,850 317 19.96 39.13 1.89
11. A1NKOS-7249 3,900 433 26.47 50 2.07
12. A1NKOS-7254 900 100 31.85 59.85 2.16
13. A1NKOS-7270 5,850 650 32.81 61.55 2.38
14. A1NKOS-7285 7,675 853 51.66 92.44 2.79
15. A1NKOS-7286 15,325 1703 25.73 48.64 2.06
16. A1NKOS-7288 8,200 911 16.52 34.07 1.87
17. A1NKOS-7296 200 22 17.64 35.09 1.88
18. A1NKOS-7417 225 25 19.62 33.93 0.83
19. A1NKOS-7418 1587 25 17.45 33.22 1.78
20. A1NKOS-7421 625 69 34.14 63.01 2.3
21. A1NKOS-7456 16,125 1792 28.35 55.79 2.59
22. A1NKOS-7457 9,990 1110 61.72 114.97 2.68
23. A1NKOS-7458 16,975 1886 67.21 121.74 2.85
24. A1NKOS-7459 31,300 3478 24.68 44.76 1.73
25. A1NKOS-7460 5,350 594 25.14 48.7 2.07
26. A1NKOS-7487 23,800 2644 29.78 55.26 1.97
27. A1NKOS-7488 85,590 9510 27.94 56.39 2.6
28. A1NKOS-7490 55,450 6161 50.39 89.11 1.9
29. A1NKOS-7493 28,950 3217 52.97 93.48 1.92
30. A1NKOS-7494 1,150 128 34.45 64.18 2.37
31. A1NKOS-7495 187,800 20867 33.24 62.1 2.38
32. A1NKOS-7496 14,700 1633 32.6 59.87 2.13
33. A1NKOS-7497 23,600 2622 39.84 72.12 2.32
34. A1NKOS-7498 25,050 2783 41.91 75.65 2.31
35. A1NKOS-7625 13,575 1508 42.8 77.72 2.62
36. A1NKOS-7627 39,525 4392 49.36 88.54 2.7
37. A1NKOS-7757 21,050 2339 0.91 7.58 1.88
38. A1NKOS-7842 3,875 431 2.61 5.27 0.65
39. A1NKOS-7847 5,000 556 4.02 7.68 0.76
40. A1NKOS-7851 56,200 6244 9.32 17.47 1.73
41. A1NKOS-7872 5,050 561 4.81 9.17 0.81
42. A1NKOS-7877 33,900 3767 13.55 23.76 0.94
43. A1NKOS-79002 5,855 651 1.38 3.34 0.56
44. A1NKOS-7915 400 44 1.04 2.79 0.66
45. A1NKOS-7917 4,400 489 4.68 9.43 1.23
46. A1NKOS-7918 18,000 2000 2.24 4.79 0.73
47. A1NKOS-7919 11,200 1244 0.88 2.53 0.66
48. A1NKOS-7920 8,600 956 1.8 3.87 0.6
49. A1NKOS-7921 10,300 1144 2.26 4.65 0.62
50. A1NKOS-7922 175 19 0.73 2.16 0.6
51. A1NKOS-7923 2,600 289 10.04 19.81 2.52
52. A1NKOS-7925 10,350 1150 1.41 3.39 0.65
53. Total 1136551 5214 1200 150 200
_
EOQ √2 * ANNUAL DEMAND * OREDRING COST
=
= √2 * 1136551 *150
1200 * 200
= 15.38 (tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORDERING COST
C = PURCHASING COST
I = INVENTORY CARRING CHARGES.
2 2
= 965878 (CRORES)
MATERIAL ANNUAL CONSUMPTION OF DAIRY FOR THE YEAR 2020-2021
= √ 2 * 785735 *164.17
2384.94* 45.27
= 14.87 (tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
2 2
= 193923(CRORES)
= √ 2 * 635489 * 300
150 * 127
= 200.15(tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORDERING COST
C = PURCHASING COST
I = INVENTORY CARRING CHARGES.
= 55650.76 (CRORES)
54
INTERPRETATION
1. The total cost incurred in MORRERO FOODS PVT LTD for the last five years is high.
= √ 2 * 291703 * 3674
9000 * 450
= 8429(tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORD ERING COST
C = PURCHASING COST
I = INVENTORY CHARGES
= √ 2 *187000 * 650
870 * 250
= 890( tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORDERING COST
C = PURCHASING COST
I= INVENTORY CARRING CHARGES.
= 1300(tons)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORDERING COST
C = PURCHASING COST
I =INVENTORY CHARGES
= √2 * 429051 *60.10
150.34 * 550.7
= 2935(TONS)
TOTAL COST = AD * C+ AD * OC + Q * C * I
2 2
AD = ANNUAL DEMAND
OC = ORD ERING COST
C = PURCHASING COST
I = INVENTORY CHARGES
90000000 816900376
80000000
70000000
60000000
total cost
50000000 429450001
40000000
295035102
30000000
20000000
73024200
10000000 1 1 1 1 1 1
0
1
INTERPRETATION
4. The total cost incurred in MORRERO FOODS PVT LTD ltd for the last five years is
high.
1) All the Years are not showing sample profits. This is because of raw material
prices have been continuously under pressure due to persistent mismatch between
supply and demand.
2) In purchase department for want of any item it should go through several
processes. This may include receiving indents, floating enquiries, preparation of
order processing form, preparation of purchase order and order follow up inform
the supplier. Most of the time was spent in accounts payable.
3) In this type of process, it requires more number of employees and supplier should
also wait for until the accounts are matched.
4) This process takes an input, adds value to it and provides an output to an internal
or external customer.
CONCLUSIONS
Though MORRERO FOODS PVT LTD ltd is doing good in manufacturing many products or
items it was found that a little rectification has to be made
They are
1. Company may try to order annually rather than monthly depending upon demand for
the products.
2. Total cost incurred when purchases are made annually is less than the total cost
incurred when orders placed monthly.
4. When orders are made at one time in bulk, then suppliers may provide special
discounts.
www.google.com
www.wikkipedia.com
www.inventoryindia.com