Beruflich Dokumente
Kultur Dokumente
CONTENTS:
1)Executive summary
2)Introduction to the concept
3)Industry profile
4)Company profile
a) Back ground and inception of the company
b) Nature of the business carried
c) Vision , mission and quality policy
d)Product/services profile
e) Area of operation global/national/regional
ownership pattern
f) Competitors information
g)Infrastructural facilities
h) Achievement award
i) Workflow model (end to end)
5)Mckinseys seven S Model
a) Structure
b)Skill
c) Style
d)Strategy
e) System
f) Staf
g)Shared value
6)Research methodology
a) Title of the project
b)Statement of the problem
c) Objectives
d)Operational definitions
e) Data collection
f) Statistical tools used for research
g)Sampling techniques sampling unit, sample size
and sampling method.
h) Plan of analysis
i) Limitations
7)Data analysis and interpretation
8)Summary of the findings
9)Suggestions
10) Conclusions future growth
11) Learning experience
12) Annexure
a) Financial statements
b)Questionnaires
c) Bibliography.
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Title of the project
STATEMENT OF PROBLEM
A study of inventory management at ABB LTD is undertaken in order to know
the inventory performance and position of the company and to know the
strength and weakness and to assess the profitability of the company.
Inventories constitute most significant part of assets of large majority of the
companies in India. Inventory a double edged sword is usually an asset of an
organization, if not used properly it will become liability. It is therefore
absolutely very important to manage inventories efficiently and effectively in
order
to
overcome
unnecessary
investment.
And
To
identify
the
OBJECTIVES:
1. To study the tools and techniques of inventory
management adopted at ABB Ltd.
2. To study the inventory control measures in
inventory management.
3. To study the demand forecast of inventory
management at ABB Ltd.
4. To study how ABC analysis and aging schedule
is implemented in inventory management.
5. To determine the stock level in inventory
management at ABB Ltd.
6. To identify problems related to inventory
management and to find out suitable measures to
overcome them.
INTRODUCTION TO THE
CONCEPT
INTRODUCTION:
and
supply
of
goods,
fluctuating
inventory
prices,
of
inventory.
1) Raw materials:
consumption.
2) Work in Progress :
The work in progress is that stage of stocks, which are in
between raw materials and finished goods.
3) Consumables :
These are the material, which are needed to smoothen, the
process of production.
4) Finished Goods :
These are the goods, which are ready to sale for the
consumers.
5) Spares:
Spares also from a part of inventory.
Definition:
Inventory
control
includes
scheduling,
the
requirements,
flow of production.
damages.
and value.
10) To facilitate data for short and long term planning and control of
inventory.
NEED FOR INVENTORY CONTROL:
effi cient
accounting.
purchasing,
storage,
consumption
and
In
large
firm
the
planning
and
routing
department
is
Transaction motives:
b.
A
Precautionary motive:
firm
should
keep
some
inventory
for
unforeseen
c.
Speculative motive:
an
opportunity
to
make
profit
due
to
price
fluctuations.
(i)
Trading firm:
(ii)
Manufacturing firm:
(a)
to
have
the
regular
and
uninterrupted
production
In
most of
manufacturing
concerns
the
work
in
(b)
(a)
Carrying Cost;
(i)
Cost of storage:
occupied
infrastructure,
by
cost
stock,
of
stock
insurance,
for
and
security,
cost
of
cost
of
pilferage,
(ii)
Cost of financing:
This
cost
includes
the
cost
of
funds
invested
in
the
(b)
Cost of ordering:
of
firm.
The
ordering
cost
may
have
fixed
(c)
due
to
customers
dissatisfaction
and
may
lose
The carrying cost and the ordering cost are opposite forces and
collectively. They determine the level of inventors in a firm.
Valuation of Inventory:
Cost prices:
(a)
(b)
(c)
Specific price
(d)
(e)
(ii)
(a)
(b)
(c)
(d)
(e)
(f)
Standard price
(b)
Inflated price
(c)
Re-use price
(d)
Replacement price
This is the price paid for the material first taken into stock from
which the material to be priced could have been drawn.
for
use
where
in
material
is
slow-moving
and
Advantages:
i.
ii.
iii.
Disadvantages:
i.
ii.
iii.
This is the price paid for the material last taken into stock from
which the materials to be priced could have been drawn. This
method also ensure material being issued at the actual cost. Its
use is based on the principle that costs should be as closely as
possible related to current price level. Under this method
production cost is calculated on basis on replacement cost.
Advantages:
i.
ii.
iii.
iv.
Disadvantages:
i.
ii.
iii.
i.
ii.
iii.
iv.
analysis.
can be used
in
financial
Disadvantages:
ii.
iii.
It
is
the
predetermination
of
fixed
price
on
basis
of
A standard price for each material is set and the actual price
paid is compared with standard. It is paid exceeds the standard
a loss will be realized if not profit will be obtained.
Advantages:
i.
ii.
iii.
costs.
iv.
v.
vi.
Inflated price:
This is the price, which includes a charge designed to cover
the cost
of contingencies or related costs
This price includes not only the cost involved in bringing
the material
to the purchases premises but also the loss due to
evaporation and
Breakage etc. as well as carrying costs.
PURCHASE PROCEDURE
Purchasing
procedure
start
with
the
initiation
of
purchase
CENTERIZED PURCHASING
It is most important and relevant to large organizations operating
deferent plants may or may not be located at diferent places. For a
single place organization decentralization might be feasible on a
very limited place. But where as M & M Ltd., is a multiple plants
operating organization.
results
in
greater
buying
power,
The
favorable
It is also
Centralized
purchasing
permits
to
avail
facilities
like
reduce cost.
INVENTORY MANAGEMENT
TECHNIQUES
Based on order
quantity
Based on the
classification
ABC
analysis
Determinati
on of stock
Determinati
on of stock
VED
analysis
Economic
order
Based on the
records
HML
analysis
Aging
schedule
Inventor
y report
Inventor
y budget
ABC ANALYSIS:
The items with the highest value is given top priority and soon
and are more controlled then low value item. The re-rational
limits are as follows.
Category
% of Items
% of total materials
5-10
70-85
10-20
10-20
70-85
5-10
Procedure:
(i)
(ii)
There
after
cumulative
totals
of
annual
value
of
(i)
(ii)
carrying
cost
of
inventory
by
reducing
the
average
of
trade
of
between
benefits
derived
from
the
referred
to
as
the
economic
order
quantity
or
a.
b.
c.
d.
(i)
(ii)
Mathematical approach.
diferent
permutations
and
combinations
of
lots
of
Mathematical Approach:
2AB
C
Where,
Limitations:
The
important
limitation
is
assumption
of
constant
VED ANALYSIS:
Vital spares are spare the stock-out of which even for a short
time will stop production for quite sometime. Essential spares
are spares the absence of which cannot be tolerated for more
than a few hours a day. Desirable spares are those, which are
needed, but their absence for even a week or so will lead to
stoppage of production.
a)
b)
R = M+tu
R = Reorder level
M = Minimum level of inventory
T = Time gap / delivery time
U = Usage rate
The figure shows that if the usage rate is constant, the orders
are made at even intervals for the same amounts each time
and the inventory goes to zero just before an order is received.
Safety Stock:
The
safety
unanticipated
stock
protects
demand
for
firm
the
from
Trade
ofs
items
level
of
due
to
inventory
However
unpredictable
or
stock
lesser
inflows
predictable
and
it
outflows
becomes
to
are
carry
JUST-IN-TIME INVENTORY:
into
production.
Additionally
the
work
in
process
inventory
bufers
between
diferent
production
departments.
(ii)