OPERATIONS MANAGEMENT -2

POSTGRADUATE PROGRAMME IN MANAGEMENT

2022-24 | Term 3

BIG BAZAAR INVENTORY MANAGEMENT

Submitted to:
Prof. PRS SARMA

Submitted by:
ANIKET WALVEKAR 2210082
INTRODUCTION
The term "inventory" refers to a stock of products that are kept for the purpose of future
manufacturing or sales. The following types of storage options are available for the
inventory of goods:
1. Raw Materials
2. Partly finished goods.
3. Finished goods.
An inventory issue aims to maximize (actual or projected) profit or reduce the overall (actual
or expected) cost.
INVENTORY INVESTMENT CONTROL
Inventory investment control is accomplished in two ways:
 Holding or storage cost – The expenditures that are incurred when keeping or storing
the inventory before it is utilized are referred to as the storage or holding costs. This cost is
directly proportionate to the many different aspects of holding expenses, which are broken
down as follows:
 Material Handling costs– These include the cost of labor, transportation
charges, etc.
 Rent, interest, and the depreciation cost on owned space.
 Staff cost who maintains the record.
 Insurance and taxes.
 Opportunity cost.
 The cost of degradation increases for perishables and those whose chemical
composition changes during storage (clothing, perishable foods,
medications, etc.).
 Ordering or setup costs – This is the money spent before manufacturing even begins,
such as when an order is placed to buy items, or a machine is put up. Due to price breaks or
quantity reductions, this pricing may change depending on the number of products ordered.
Besides these cost variables, other variables may not be controlled in an inventory problem:
 Demand
 Deterministic Demands
 Nondeterministic Demands
 Lead
 Amount Delivered
 Need of Inventory:
ADVANTAGES AND DISADVANTAGES OF INVENTORY:
ADVANTAGES:
1. Manufacturinging is more cost-effective in bulk, which is advantageous
economically.
2. The company's efficient and effective operatTransportationortation economics.
 3. Buying in bulk is advantageous since you may save money.
4. Get money off of price increases you predict in the market by engaging in
speculating.
DISADVANTAGES:
1. Rent of warehouse
2. Interest on invested capital.
3. Physical handling.
4. Accounting
5. Depreciation and determination.
BIG BAZAAR
The brands sold at Big Bazaar are often well-known names nationwide, such as Lee, Levi's,
and others. It also sells Korean electronics, clothing from DJ&C and other private label
brands, and more. Big Bazaar also sells various other products, like FMCG, FOOD & NON-
FOOD junction, Staple goods, fruits & veggies, home decorators, footwear, books, CDs, and
more.
TYPES OF INVENTORIES MAINTAINED.
The store has many types of inventories on hand. The FMCG safety and food stock levels
are maintained mostly by cycle inventory. As a result of cyclical demand changes, the
Garment list is kept on the Seasonal list.
INVENTORY MANAGEMENT .
At Big Bazaar, SAP is used for inventory management. Data maintenance, general ledger, and output
are all back-office tasks that benefit from it.

Transactions involving the acquisition of products, their inward transportation, etc. At the
point of sale (POS), REM (Rapid eye movement) produces employed to produce cash
memos. It tracks inventory and syncs sales data with SAP.
DEMAND FORECASTING:
Past sales from the same fiscal quarter are used.
The quantity to be ordered is based on the formula: (Consumption in a week + safety stock
amount dependent on the number of days the provider delivers in the week).
PURCHASE ORDERS generation:
It consists of the product number, a description, the suggested retail price, the cost price, the
tax, the landing rate, the quantity, the total amount, payment conditions, and delivery dates,
among other things.
IN-WARDING PROCESS:
A physical examination, a verification of the amount, the assignment of bar codes, and an
input into the system are all included in this process.
INFORMATION ABOUT THE POSITION OF STOCK:
Every POS (Point-of-Sale) transactions are recorded via REM (Rapid Eye Movement) (Point
of Sale). In addition, it logs the current stock level and immediately syncs that information
with SAP.
MATERIAL REORDER:
Orders are made on an as-needed basis. Yet he noted that just a few things have such
standards in place. In the past, orders for new clothes would be placed when stock dropped
to less than four of a given size. Everyday and non-daily use products fell within the seven-
day umbrella.
The re-order threshold is set at fifty percent. as the two-day shipping time is always included
in. Daily, fresh produce is purchased from street sellers.
MARGINS:
Margins The MRP and CP calculations are part of the markdown strategy.
With this markdown method, we provide the CP and the client determines the MRP. The
commodities at Big Bazaar are purchased using MD margins.
The MAP is the "moving average pricing."
As prices go up, the MAP goes up, too, reflecting that you lose money on the sale of every
unit of old stock while making money on the sale of new stock units.
As prices drop, the markup over cost (MAP) decreases, revealing a profit for the old stock but
a loss for the new location.
Rate of Fill measures how well a supplier meets a buyer's needs by the quantity and quality of
items delivered in response to an order.
The term "stock take" refers to the procedure of comparing the actual stock on hand with the
recorded stock on hand. The quantity of theft within that time frame may be determined by
doing an inventory. The discrepancy between the virtual and actual quantities of an item
constitutes shrinkage.
PRODUCT CATEGORIES IN BIG BAZAAR
The brands sold at Big Bazaar are often well-known names nationwide, such as Lee, Levi's,
and others. Private label brands like DJ&C for clothing and KORYO for electronics are also
available. Next, we inquired as to the types of merchandise sold there, such as fast-moving
consumer goods, food and non-food, staples, fresh produce, clothing and accessories, music
and movies, home furnishings, books, and music, and so on.
THE DECISION OF HOW INVENTORIES ARE MAINTAINED
The shop manager determines the appropriate stock level by monitoring sales and client
needs. The manager keeps track of Stock - in & Stock - to determine appropriate stock
levels. He has also seen tendencies in the need for lists, such as the fact that clothing is often
ordered 45 days in advance. They have ten extra items of clothing for every sample they
send out.
Big Bazaar has a supply management system called Minimum Base Unit (MBU), which
ensures a certain minimum quantity of each product is always available. To illustrate,
supposing we have an item in stock with a quantity of 50 or less. In such situation, the
system will promptly create an Order Quantity report for the vendor, who will subsequently
provide the required inventory. In addition, the Goods Received Report (GRR) is kept so
that we may compare and contrast the wares of our many suppliers.
If additional pieces are needed, however, the shopkeepers will first inquire about expanding
to other bazaars like Patia, etc., and only resort to "Transfer of Interest" if they are unable to
fulfil their customers' requests. Instead of losing clients, they'd rather direct them to
pantaloons, which is also owned by Future Group.
In addition to these factors, seasonality also influences product sales. For instance, retailers
see a rise in demand and a subsequent rise in stock requirements throughout the winter.
Huge technical progress has been made recently at Big Bazaar, with the whole supply chain
becoming digital. The computer will automatically submit a request for backup after selling
the product.
FLUCTUATION OF DEMANDS OF CUSTOMERS
The uncertain demands are met through other outlets of big bazaars or the transfer of interest
to different outlets of future groups, like Pantaloons.
PERISHABLE AND IMPERISHABLE GOODS
Much attention is paid to preserving perishables like vegetables. Daily vegetable purchases
are made according to what is in season. It's also been shown that other markets sell
imperfect produce at a lower price. Nevertheless, perishable items like food have to be
stored. Therefore, things like cooking utensils, basic foods, and electronics must be
purchased from outside sources. Central Distribution Channel manages the distribution
channel utilized in the supply chain process, from which all Big Bazaar Stores get their
items.
Throughout the supply chain process, vehicles are mostly employed for transport, while
planes are often kept on hand for sudden surges in demand. We use a third party to handle
the transportation. Fast & Safe, Gati, Deluxe Roadways, and TNT are the primary transport
providers for Big Bazaar.

LESSON LEARNT
1. Accurate forecasting: Inventory management requires forecasting demand for
products accurately. This can be done through analyzing sales data, market trends,
and customer behavior. Big Bazaar can use advanced analytics tools and machine
learning algorithms to predict demand accurately.
2. Efficient supply chain management: To maintain an optimal level of inventory, Big
Bazaar needs to manage its supply chain efficiently. This includes identifying
reliable suppliers, maintaining good relationships with them, and negotiating
favorable terms.
3. Real-time inventory tracking: Keeping track of inventory in real-time is crucial to
prevent stockouts or overstocking. Big Bazaar can use inventory management
software to monitor stock levels, track orders, and generate alerts when inventory
levels are low.
4. Product categorization: Big Bazaar can categorize products based on their demand,
popularity, and seasonality to optimize inventory levels. This helps in allocating
inventory to the right products and locations.
5. Just-in-time (JIT) inventory: JIT inventory management involves ordering products
only when they are needed, rather than stocking up in advance. Big Bazaar can use
this strategy to reduce inventory carrying costs, improve cash flow, and increase
efficiency.
6. Continuous improvement: Finally, continuous improvement is essential for effective
inventory management. Big Bazaar can use data analytics and other tools to monitor
inventory performance, identify areas for improvement, and make ongoing
adjustments to their strategies.
REFERENCES :

1. Store, C. (2013). Inventory Management Process,

https://web.archive.org/web/20190225063019id_/http://pdfs.semanticscholar.org/
5e96/75f2828f52e6ec042371cbfb34cc0f7db45c.pdf
2. Mistry, D. S., & Vyas, P. C. (2021). Similar yet Different: A Comparative Study of
Profitability Performance of Indian Retail Sector with a Special Reference to Big
Bazaar and D Mart. ADHYAYAN: A JOURNAL OF MANAGEMENT SCIENCES,
11(01), 8-14.
3. Agrahari, A., & Jhunjhunwala, S. (2012). Inventory management process: problems in
an Indian convenience store. Journal of Cases on Information Technology (JCIT),
14(1), 1-14.