A STUDY ON INVENTORY MANAGEMENT WITH REFERENCE

TO MAGNA MODULES AND SYSTEMS

PRASANNA VENKATESH.N

NEED FOR THE STUDY

The cost of raw material consists of more than 25% of the cost production, so the control at raw material is essential for an organization. Effect of control at finished goods are not controlled properly and it leads to high incident of stock holding price. Effect of uncontrolled of other inventories may leads to production held up and machine gets obsolescence, over stocking of spares inventory will lead to high inventory level.

OBJECTIVES OF THE STUDY

• To evaluate inventory using a suitable control technique.

• To classify the various components based on its value and quantities.

• To optimize the usage of inventory.

SCOPE OF THE STUDY

This research study helps me to understand the control of inventory at Magnaa Modules and Systems. This study helps an organization to reduce their investment on the storage of their goods for inventory. This study involves the inventory details of Magnaa Modules and systems.

REVIEW OF LITERATURE

• Jon Schreibfeder,1992 ,He said that it is easy to turn cash into inventory, the challenge is to turn inventory back into cash. In early 1990’s many distributor recognize that they needed help controlling and managing their largest asset inventory. In response to this need several companies developed comprehensive inventory management modules and systems. These new package include many new features designed to help distributors effectively managed warehouse stock. But after implementing this many distributors do not feel that they have gained control of their inventory.

• Wolf Bagby, 1996,Managing inventory ,In this study Mr. W.Bagby explains that by managing the inventory it becomes easier for the organization to meet the profit goals, shorter the cash cycle, avoid inventory shortage, avoid excessive carrying costs for unused inventory, and improve profitability by decreasing cash conversion and adopt JIT system. According to this study companies need to get smart about inventory. Boosting financial performance is another benefit that comes from better inventory management. Infect large number of manufacturers enjoy savings and better performance by choosing the approach of inventory reduction.For this company needs to maximize the cash flow and profitability and this includes keeping a watchful discerning eye on charge in supply and demand.

RESEARCH METHODOLOGY• Research Design : Analytical Research• Data Collection : Secondary Data• Analytical Tools: Abc (Always Better Control)

LIMITATION OF THE STUDY• The data are collected from the period of 2011-2013 and time taken for

the period of project is January 2013 to April 2013.• Due to time constraints tool used for controlling inventories is ABC

(Always Better Control) analysis.

ABC ANALYSIS FOR FOUR YEARS

YEAR 2009-2010 2010-2011 2011-2012 2012-2013

Class Quantity Value Quantity Value Quantity Value Quantity Value

A 7468 6034840 9057 7335361 7620 6200452 14204 11501570

B 9481 2877407 10615 3080490 9674 2938453 18066 4941999

C 27516 611112 30452 662845 28078 636605 64236 1366233

Grand

Total44465 9523360 50124 11078696 45372 9775510 96506 17809802

OVER ALL PERCENTAGE OF ABC ANALYSIS FOR FOUR YEARS

YEAR 2009-2010 2010-2011 2011-2012 2012-2013

Class Quantity Value Quantity Value Quantity Value Quantity Value

A 17% 63% 18% 66% 18% 63% 18% 65%

B 21% 31% 21% 28% 21% 30% 21% 28%

C 62% 6% 61% 6% 61% 7% 61% 8%

Grand

Total100% 100% 100% 100% 100% 100% 100% 100%

ABC ANALYSIS FOUR YEARS QUANTITY ABC ANALYSIS FOR THREE YEARS VALUES

FINDINGS

• In the year of 2012-13, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C.

• In the year of 2012-13, under the class A products value constitutes 65%, 28% value of product falls under the class B, 8% value of product falls under the Category C.

• In the year of 2011-12, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C.

• In the year of 2011-12, under the class A products value constitutes 63%, 30% value of product falls under the class B, 7% value of product falls under the Category C.

• In the year of 2010-11, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C.

• In the year of 2010-11, under the class A products value constitutes 65%, 28% value of product falls under the class B, 8% value of product falls under the Category C.

• In the year of 2009-10, under the class A products quantity constitutes 17%, 21% quantity of product falls under the class B, 62% quantity of product falls under the Category C.

• In the year of 2009-10, under the class A products value constitutes 63%, 31% value of product falls under the class B, 6% value of product falls under the Category C.

SUGGESTIONS

• It is required to have close observation of the Class A materials, since the materials constitutes about 65 percentage of the total value of inventory.

• The inventory can be controlled on basis of the classification to ensure the optimum utilization of inventory.

• It is suggested to have a proper system to analyze and review the inventory in a periodical basis.

CONCLUSION

A better inventory management will surely be helpful in solving the problems the company is facing with respect to inventory and will pave way for reducing the huge investment or blocking of money in inventory. From the analysis we can conclude that there should be tight control exercised on stock levels based on ABC analysis in order to maintain optimum utilization of inventory and efficient investment on inventory. If they could properly implement and follow the norms and techniques of inventory management, they can enhance the profit with minimum cost.