INTRODUCTION TO THE STUDY

Inventory is materials and components, work in

progress, finished goods.

A proper inventory management help the

organization to maintain the minimum financial
impact on the customer.

inventory management is kept in hands for

smooth and efficient running of future affairs of
an organization at the minimum cost of funds
blocked in inventories.
 STATEMENT OF THE PROBLEM

The problem selected to the analysis is to study the

effectiveness of inventory control system at the
effectiveness of the prevailed inventory system is
analyzing simultaneously.
 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE :
To analyse the efficiency of Inventory Management of
SECONDARY OBJECTIVE :

To understand the efficiency of inventory management.

To identify optimum level of inventory which minimizes the cost.
To identify the safety stock level for various components.
To classify the various components based on its value and
movements.
To identity inventory requirement of the company for the next year.
 SCOPE OF THE STUDY
Inventory management is a very simple concept dont have
too much stock and dont have too little. Since there can be
substantial costs involved in straying above and below the
optimal range, careful inventory management can make a
huge difference in a profitability of a business.
 RESEARCH METHODOLOGY
Research is a process in which the researcher wish to find out
the end result for a given problem and thus the solution helps in
future course of action.
RESEARCH DESIGN
The research design used in this project is Descriptive Research
Design.
TOOLS USED IN THE ANALYSIS

1. Economic Order Quantity

2. Safety Stock
3. ABC Analysis
4. FSN Analysis
5. Trend Analysis
6. Inventory Turnover Ratio
 LIMITATIONS OF THE STUDY
1. The entire analysis applies only

2. The study takes into account only the quantitative data and the
qualitative aspects were not taken into account.

3. The study only based on the past result of limited period. (i.e.) for
past five years.

4. The assumption made in the EOQ and Safety stock formulas

restrict the use of the formula. In practice, unit cost, lead time,
requirements of inventory items are not accurately predictable.

5. ABC analysis is not one time exercise and items are to be

reviewed and recategorised periodically.
 FINDINGS FROM THE STUDY

Variation in the EOQ & no. of unit purchased. Not

following EOQ
We can able to determine how much the company
can hold the inventory in reserve stock per annum.

A Classes - constitutes 33% of total items.

B Classes - constitutes 40% of total items.
C Classes - constitutes 27% of total items.
 FINDINGS FROM THE STUDY

F items are those which moves fastly - constitutes

57% of total items.
S items are those which moves slowly - constitutes
43% of total items.
N items are those Non moving- according to the
given data there is no Non moving.
 FINDINGS FROM THE STUDY
TREND OF INVENTORY
20

15

10

0
2008 2009 2010 2011 2012 2013

Inventory shows increasing trend from 14.76 to 17.85 in the year

2008 to 2012, the inventory for the year 2013 is expected to be
18.35 This indicates efficiency of management.
 FINDINGS FROM THE STUDY
INVENTORIES TURNOVER RATIO
Inventory Turnover Ratio

18
16
14
12
10
8
6
4
2
0
2008 2009 2010 2011 2012

The ratio shows decreasing trend from 15.16 to 9.15 in the year 2008
to 2011 & again increasing trend 2012.
Whereas velocity shows less in 2011 as compared to the year 2009
which is 23 days and 39 days respectively.
 SUGGESTIONS & RECOMMENTATIONS
If they follow according to EOQ, it will reduce the cost & help
to enhance the profit.
The company must maintains safety stock in order to avoid
stock-out (no inventory) conditions & helps in continuous flow.
Since A classes constitutes more % than B & C. There should
be tight control in inventories- done through continuous check,
order frequently, to avoid over investment of Working Capital.
The company must not go to the Non-moving items as far as
possible- unnecessary blockage of WC.
The company is expecting more inventories for future i.e.,
2013.
It requires to maintain high turnover ratio than the lower ratio.
A high ratio implies good and efficient business activities.
 CONCLSION

Can follow EOQ to optimize inventory with minimum

cost.
Tight control exercised on stock levels on ABC & high
percentage in Fast moving items on FSN.
Since inventory turnover ratio shows the increasing
trend, there will be more demand for the products in the
future.
THANK YOU