Project Bindu Final

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.
TOWARDS PROJECT
PVC pipes polyvinyl chloride pipes have become synonyms with modern living. It is
undoubtedly a product which has deeply penetrated into common mans life. No wonder the
industry has achieved remarkable goal. The Government of India recognized the importance
of plastics in agriculture appointed on March 7th, 1981. Plastics are perceived as just simple
colorful household products in the minds of common person. A dominant part of plastics
present and future improved their utilization in the following areas are agriculture, forestry
and water management, automobile and transportation, electronics and Tele communications,
building. construction and furniture especially food substitutes, food processing and
packaging and power and gas distribution. Sujala Pipes Pvt Ltd.,Nandyal was incorporated in
the year 1979 in the industrial estate Nandyal and this was promoted by MD. Mr.S.Y.Reddy.
BE(Mechanical), who has decades of experience in manufacturing industry. The brand name
is Nandi Pipes.
The Company Sujala Pipes Pvt Ltd has been supplying variety of pipes through out
India. Even though it has a good Net work. The company faces different problems like
lack of dealer satisfaction, differences in customers perceptions, lack of financial appraisal
Department of Business Administration, Yogi, Vemana University, KADAPA-516003
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PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,
techniques, ineffective inventory management techniques and the like. Though the Company
has several departments the under researched area is finance and less number of studies have
been conducted on inventory management in the company. The company does not follow any
scientific inventory management system and there araised a need to device a system which
could reduce costs aconstitutingowar profitability and also provides to maintain a proper
system in inventory of the organization. The main objectives of the study are to analyse the
present practices adopted in inventory management and inventory of raw materials, to elicit
the maximum utilization level of raw material and inventory in the company and to ensure
effective inventory management techniques for the company for smooth survival.
There are nine branches located in India, three are located in Karnataka, one in Tamil
Nadu, one in Kerala, one in Maharastra, one in Pondicheri, one in Orissa and one in Andhra
Pradesh, which is the Head Office located in Nandyal. Among all these branches, the
selected branch of Sujala Pipes pvt Ltd was incorporated at Nandyal in Andhra Pradesh. The
executives and Finance department officials are enquired for the purpose of the study.A study
is mainly based on the descriptive research design. This design largely interprets the already
available information. It makes up of secondary data. The data for the present study is
collected through primary and secondary sources.
The present study is confined to only Sujala Pipes Pvt Ltd., located in Nandyal. The
study is limited to raw material, finished stock of goods only. The study has been analysed
by taking the information related to both the present and past data with reference to the
performance of the company. The present study is confined to five years from 2003-04 to
2007-08. The financial tools used in the present study are Economic Order Quantity,
Inventory turnover ratio, Ordering cost, Carrying cost, Holding period, ABC analysis and the
like.

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CHAPTER LAYOUT
The study confines to Six chapters :
Chapter - 1
Plastic Industry A Profile.
Chapter 2 Sujala Pipes Pvt Ltd.,- A Profile

Chapter 3 Research Methodology and Design
Chapter 4 Inventory management A Review
Chapter 5 Data Analysis and Interpretation
Chapter 6 Conclusions, Findings and Suggestions

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ABOUT INDUSTRY
PVC Poly Vinyl Chloride pipes have become synonymous. With modern living. It is
undoubtedly a product with has deeply penetrated in to common mans life. No wonder the
industry has achieved remarkable progress in terms of supply of raw materials, and
diversification of processing capabilities. In addition, manufacturing of processing machinery
and ancillary equipment sophistication.
This versatile material with superior qualities such as light weight, easy processing,
corrosion resistance, energy conservative, non-taxis etc. May substitute to large estimate of
many conventional and costly industrial materials like wood, glass metal etc. in the future the
manifold applications of plastics in the filed of automobiles, electronic, electrical packaging
and agriculture give its immense utility in PVC plastics.
At present as percent of total requirement of raw material and almost all types of
plastic machines required for the industry or not adequately available. The present investment
in all the three segments namely, production of raw materials, expansion and diversification
of raw materials, expansion and diversification of processing capacities, manufacturing of

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processing machinery. Equipment is 1250 crores and it provided employment at more than 8
lakhs people.
Plastic have been subjected to levies not at the central level but also at the state local
governments. These levels have affected the price of the plastic products adversely. The percapita consumption of plastic is very low at 0.5kg. As against the world average of 11 Kgs.
The per-capita consumption is 687 Kgs in FRANCE, 33 Kgs in U.K. and even in Asian
countries likes SOUTH KOREA it is 8.5 Kgs.
On account of their inherent advantage in properties and versatile in adaption and use,
plastics have come to play a vital role in a variety of applications the world over. In our
country plastics are used in marketing essentials consumer goods which are of daily use for
common man. Such as baskets carry bags, bottles, piles, pens, chairs etc. They also have
applications in agriculture, building constructions, water management resources, engineering
and electronics.
The government of India recognized the importance of plastics in agriculture
appointed on March 7th 1981 a national committee on the use of plastics in agriculture under
chairmanship of Dr. G.V.K. Rao. The committee has forecast a treatment as fright of drip
irrigation through a net work of plastic tubes and pipes. In its origin large scale adoption of
irrigation would lead to support in demand of P.V.C. pipes LDPE tubes and play proper by
lane emitter. The committee maintains a number number of recommendations of promoting
the use of plastics. The implementation of the recommendations would so a long way is
increasing the consumption of plastics, which at present is very low.
The committee has highlighted the importance of use of PVC resin is the manufacture
of rigid piped, flexible pipes and sheets which are being used for agricultural to carry water
from place to place and living of panels and reservoirs to reduce sweepers and most
important in drip irrigation sequence.
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A break through had already taken lace in the filed of channel lining iwht poly
urethane in the state of Gujarat, Madhya Pradesh, Punjab and Haryana. The irrigation
departments in these states have taken concrete steps to incorporate canal living within LDPE
(Low density) pipes on priority basis. Another verity of plastic that requires artificial
manufacturing relates to true engineering which is used as a alternative to (or) replacement of
metals in load needing applications.
Modified P.P.O. Nylon, Polyhedral, Polycarbonates, polyester (PBT/PET) phonic are
same of the plastics are being increasingly used for various applications in automatic,
telecommunications and other industries. Te plastics are plastics are classified into
two classes.
Thermo plastics
Thermostats
The thermo plastics become sufficiently soft as the application of heat. The
thermostats are the initial application of heat and pressure subjected for fire, but
upon further application of heat and pressure they are cured to heat and pressure.
They are cured to hard molded piece which cannot be resifted by reheating.
LDPE: Low Density Poly Ethline
Production of LOFE was started in the year in 1995. At present there are 3
units manufacturing LOPE with a total capacity of 1.15 lakh tones. Products
targeted of LOPE by the end of 1999 are placed at 1.86 lakh tones.
HDPE: High Density Poly Ethylene
Production of HOPE in India commended in 1968, at present there is a
unit(play Offices industries Ltd.) in India, producing HOPF by the end of 1989-90
was producing 1.25 Lakh tones.

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PVC: Poly Vinyl Chloride

Production of PVC stated in 1961, against first production of PVC in the
world, 1927. At present there are 6 units manufacturers PVC resins. The totals
installed capacity comes to 1.7 lakh tones. The production target of PVC by the end
of 1989-90 is placed is lakh tones.
P0lystyrene
Polystyrene was first manufactured in India in May 1987. The production
target of polystyrene by the end of 1989-90 is set out to 29,000 tones.
Poly Propylene
The first production of poly propylene in India commenced in 1978. A
production target of 36,000 tones is achieved by the end of 1993-94.
ADS (Acrvlonitril Butadiene styrene)
The production of P.BS in India started in 1978. The present total installed
capacity is 5000 tones.
Problems
Raw material is always been a problem to be recorded with the plastic
industry. The situation was slightly and is expected to change considerably by
commissioning the major petrol chemical project in the pipe line by the year 1990.
The Maharastra Gas cracker. Complex, Haldia petrol chemicals and Reliance
petrol chemicals together with the expansion of existing giants will go a long way to
mitigate this long, study problem. By the terminal year of the plan, the installed
capacity targeted in almost 8 lakh tones.
The steep rice in the raw materials as a result of imposition of duties and taxes
poses another problem to the public industry. On account of this domestic price'of
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finished goods are higher than the rest of world. Apart from this, The administered
pieces for basic raw materials have not been implemented with a balanced view to
accommodation the interests of both consumers and manufactures. The feed stocks
for pertro chemical industries are naphtha feeds stocks. Hence the pricing naphtha by
the government has cascading effect.
Export of the plastic goods
Plastics have been excellent potentialities. Our country equipped with all
kinds of processing machines and skilled labor and undoubtedly, an extra effort to
boost export finished plastic goods will yield rich divided.
Today, India exports plastics product to as many 80 countries all over the
world. The reports, which were stagnated at around Rs:60-70 crore per annum
doubled to 129 crore in early 1990's. in 1991-92 plastic industry has taken up a
challenged of achieve export target of 250 cores. Major export markets for plastic
products and usage are Australia, Bangladesh, Canada, Egypt, France, Holland, Italy,
Hong, SriLanka, Sweden, Taiwan, Taiwan, U.K, U.A.S and Russia.
With a view to boosting the exports, the plastics and Iinoleums, export
promotion council has requested the government to reduce import duty on plastic
raw materials supply of raw materials at international prices, fix duty free backs on
weighty base interested of volume basis.
Prospects
The production of various plastics raw materials the country is expected to
double by the end of the seventh five years plan. when the PCV's capacity expansion
programmed is completed as well as the new plants by other manufactures
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programmed is completed as well as new plants by other manufactures like PIL,

century Enka, Reliance are set up during the period, the consumption of commodity
plastic including LDPE, HDPE, PP,PS, and PVC is expected to touch the one million
tones mark by 1989-90. There is immense scope for the use of plastics in agriculture,
electronics telecommunication, automobile, irrigation and thus, the plastic industry is
on the threshold of an explosive growth.
Role of plastics in the Nations Economy:
Plastics are perceived as just simple colorful household products in the minds
of common person. A dominant part of plastics of present and future improved their
utilization in the following areas.
Agriculture, Forestry and water management

Automobile and transportation
Electronics and Telecommunications, building.
Construction and Furniture especially wood substitutes
Food processing and packaging.
Power and Gas distribution.
Products & Services
Product/Services
Other plastic pipes
Other plastic profile shapes
Plastic drain, waste and vent pipes
Plastic industrial and mining pipes
Plastic pipe fittings and unions
Polyethylene rods, tubes and profile shapes
PVC water pressure pipes
Vinyl copolymer rods, tubes and profile shapes
MANUFACTURING PROCESS

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Tubes are manufactured from mild steel strips slitted from Hot Rolled Low Carbon
Steel coils conforming to IS: 10748-1995. The strip passes through a series of drive forming
and fin rolls and takes the required circular shape and is welded continuously by passage of
an electric current of high frequency i.e.4,50,000 cycles/second across the abutting edges.
The tubes thus formed and welded pass through the sizing sections where dimensional
deviations if any are corrected before the tubes are cut into required length by automatic
cutting machines. The tubes are then end debarred and pressure tested. Thereafter protective
surface finishing operations such as hot dip Galvanizing or varnishing is done as per specific
requirement. The tubes are offered as plain, beveled, threaded ends or with flanges.
Flow Chart

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Global demand to grow4.6% yearly through 2012

Worldwide demand for plastic pipe is forecast to increase 4.6 percent annually through 2012
to 8.2 billion meters, or 18.2 million metric tons. Gains will be based on continued strong
prospects in developing nations, particularly in China. In fact, China will account for 30
percent of overall length demand gains for plastic pipe between 2007 and 2012.
PVC to remain leading plastic pipe resin
Polyvinyl chloride (PVC) is the leading plastic pipe resin, accounting for nearly twothirds of plastic pipe demand by weight in 2007. PVC pipe is popular because of its low cost,
durability, strength and ease of extrusion, allowing it to make inroads against non-plastic pipe
materials. Demand for HDPE pipe will benefit from use as small-diameter pipe in natural gas
transmission, as conduit for electrical and telecommunications applications, and as corrugated
pipe for drains and sewers. While comparatively small, demand for fiberglass pipe will post
well above average gains, reflecting growth in extreme environment uses.
Developed countries to continue accounting for most plastic pipe demand
Despite below-average growth, developed countries will continue to account for the
majority of total plastic pipe demand. These regions (Western Europe and North America, as

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well as certain nations in the Asia/Pacific region, such as Japan and Australia) have the
highest levels of pipe use intensity. However, they are also comparatively mature markets,
where growth in construction activity tends to be well below the global average inhibiting
growth rates for plastic pipe.
In the developing countries of Eastern Europe, Asia (exclusive of Japan) and the
Africa/Mideast region, gains will outpace the global average, benefitting from ongoing
infrastructure development. Economic growth in these countries will create demand for
plastic pipe in networks for telecommunications and in residential home building
applications. In addition, ongoing efforts across these regions to upgrade water treatment
systems will boost demand for plastic pipe used for potable water delivery and in drainage
and sewage applications.
Finally, in many nations, demand will benefit from the expansion of natural gas
distribution networks. A large number of these networks are currently under construction, in
response to accelerating demand for natural gas in heating, industrial fuel and electricity
generation applications. In particular, growth in these applications will benefit high density
polyethylene (HDPE) pipe.
Product Description
Plastic flexible wash basin pipe.
Material: Pp
Size: 11/2"*40mm or 11/4"*32mm.
Length: 80-120cm as custom request.
Draining in sink, flume, or wash basin...
This hose can fit with other fitting like stainless bowl, or other fitting see the picture
Plastic Water Pipes Affect Odor and Taste Of Drinking Water

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Plastic pipes, which are increasingly being used in place of copper water pipes, can
significantly affect the odor and taste of drinking water, according to a pioneering study on
the subject.
"Fruity plastic" may seem like a connoisseur's description of the bouquet of a bottle of
Chardonnay or Merlot gone bad. However, that was among several uncomplimentary terms
that a panel of water "sensory experts" used to describe the odor of drinking water from the
plastic piping that is finding its way into an increasing number of homes these days.
The sampling was part of pioneering research on how plumbing materials affect the
odor and taste of drinking water, which was reported at the 234th national meeting of the
American Chemical Society (ACS).
Andrea Dietrich, Ph.D., who reported to the ACS, the world's largest scientific
society, pointed out that a rash of costly pinhole leaks in recent years in commonly used
copper water pipes has led to renewed interest in lower priced plastic pipes. Dietrich and
colleagues at Virginia Tech are among those scientists leading the way in evaluating how
plastic might affect water quality and odor.
"Although water is a complex mixture of organic and inorganic chemicals, most
people expect their drinking water to have little or no flavor," Dietrich noted. With those
expectations, any taste or odor in a glass of water can be "highly noticeable."
Dietrich's team is using two methods to evaluate odors associated with several types
of plastic piping. First, sensory panelists smell and describe the odor of the water after it has
sat in the pipes for several days. Then, the water undergoes chemical analyses for metals and
organics and basic water quality parameters, such as pH.
Using specially prepared, neutral-smelling water as their control, panelists described
the test water samples in terms that included "waxy plastic citrus," "fruity plastic" and
"burning plastic." Fortunately, the odors are not long lasting, Dietrich said. "We find that after

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about two months, most of the odors and water quality effects have gone to background."
How quickly the odors disappear depends on the amount of water usage, she added. When a
household uses more water, the odors fade faster.
Dietrich told the ACS that her group evaluated several types of plastic piping: cPVC
(chlorinated polyvinyl chloride), HDPE (high-density polyethylene), and PEX-aA and PEXb, which are cross linked polyethylene. Each is approved and certified for use in drinking
water applications by NSF International, an independent certification, standards and testing
organization, and ANSI, the American National Standards Institute.
"We found that PVC has a low odor potential and it doesn't seem to release many
organic chemicals," Dietrich said. "HPDE actually had the highest odor production, although
it didn't release very many organic materials. The PEX-b pipe had a moderate amount of
odors and also a moderate amount of organic chemicals that were released into the air. PEX-a
had fewer odors and organics release than the PEX-b pipe."
Asked about her personal preference in plastic piping, Dietrich replied: "I would
recommend people talk to their neighbors and find out what type of plumbing materials they
have and if they are having problems. We do suspect that certain materials are going to be
more compatible in certain areas," due to the differences in water quality from one part of the
country to another.
For now, Dietrich's group is focused mainly on the odors imparted by plastic pipes
and the analysis of any organic compounds that may leach into the water from the pipes.
Asked if there may be any health effects from the leached compounds, Dietrich said that is
still under investigation and she doesn't have any answers at this point.

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ABOUT SUJALA INDUSTRIES

Sujala Pipes Pvt Ltd. Nandyal was incorporated in the year 1988 it is located in
the industrial estate, Nandyal. The company has "Rain Plastic Pipes Industry" as its
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sister concern in the manufacture of PVC pipes. This company is promoted by the
Managing Director Sri .S.P.Y.Reddy, B.E (Mech) who has decades of experience in
the manufacturing industry.
The company has three main PVC pipes brands. They are "Nandi",
"SUJALA", and "Rani". But the flagship brand is "NANDI PIPES". The name
"NANDI" derives form the historical aspects of this town, Nandyal. The brand name
"NANDI PIPES" as taken from the pilgrimage place called "MAHANANDI" which
is 15 km from Nandyal. The company has diversified in to various fields in the recent
past. Apart from manufacture of mineral water under the brand name "Name mineral
water" dairy products "Nandi dairy" which supplies regular milk to the people of
Nandyal and Villages in and around Nandyal?
The company rightly thinks there is an inseparable relation between education
and business. Managing Director Mr. S.P.Y.Reddy encouraging women to educate by
establishing women colleges in Nandyal. Sujala pipes also gone for expansion
program. They have taken over "monarch pipes" Anantapur which was a main
competitor.
The company is providing good source of employment to the people who are at
both workmen level as well as administrative level. sujala Pipes which was once upon
a time a sole manufacturer of plastic goods in to many companies. Their turnover
touched a remarkable figure nearly Rs. 30 crores in the year 1999-2000.
The main objective in starting this industry was to cater to the needs of
farmers to facilitate water flow in this area which lakhs rainfall and to use the water
resources productively. This helps the farmers in lifting the ground water to the
surface as well as free flow of the water as an and when necessary.
Initially the industry was producing polythene pipes and PVC(poly vinyl
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chloride) pipes were introduced under the same brand name later in 1984-85 the
growth of PVC industry in Rayalaseema area of A.P. has seen rapid growth in the
early 90's. The company also produce PVC fittings. In short it can be concluded that
the company enjoys 95% of south Indian company does is free offer of
transportation to the door steps of the customers when he purchases 100 or more
pipes. The company also provides free medical facilities to the employees. SUjala
pipes also involved in social activities by providing free water supply to the needy
people. Company organize free medical camps to the poor people. It also gives loans
to unemployed youth in fulfilling their career objective.
As the company caters to the needs of farmer and its main products is
agricultural related product they enjoy maximum benefits given by the government.
They are no unions in the organization as there an there is good relation and working
climate exists in the organization between
Management and employees. It basically work on 2 shifts. Residences are also
provided by the company to its workforce and employees at confessional rent.
Financially the company markets sounds very good. It gives a credit of 21
days to its customers. It has a wide distribution network both in A.P. as well as
neighbor states in the south India. Industrial accidents are also nil in the company.
The company markets products through telephone orders. It has a wide network of
distributors all over south India.
BRANCHES OF NANDI PIPES
Monarch pipes, Anantapur.
ITL, Hyderabad
COMPETITIORS
Sudhakar pipes
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Finolex in Karnataka & Maharastra.

MAN POWER
The personnel manager plan and provide for future openings, anticipating
deaths, dismissals, resignations anticipating future promotion future transfer,
estimating future positions
PRODUCT PROFILE
The main products manufacture by the company is rigid PVC pipes NANDI
RIGID PVC PIPES with their good quality, trouble free service durability and
economical use are better choice than mild steel, galvanized steel, cast iron, plastic
pipes.
Kolsite compact Monolayer film plants.
Compact chiller.
Innovative Extrusion
Thin screw RPVC extruder.
Reprocess extruder plant.
Kolsite-Ballenfeld next generation pipe plant.
Trusted name in plastic machinery (President plastic machinery)
Payal industries Ahmadabad.
Micro Injection MouldING machines.
Net plant.
MANUFACTURING PROCESS
The manufacturing process for NANDI pipes is as follows:
The power form out of the motor is transmitted to main gearbox through a No.
of U-belts& pulleys to the input shaft of the gearbox.
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The main gearbox is worm gear box having reduction ratios of 15:1 the
gearbox is mounted on the top of base on a well-machined pad and held. Firmly by 4
NOs. of hexagonal headed screws,
The output shaft of gearbox is connected to the output shaft of the thrust
assembly through ageavy-duty flexible coupling. The two output shafts are perfectly
aligned by Checking the run of this coupling and gear box and hopper Block are
dwelled to the base in correct position.
The splinted end of the extended screw engages with splinted bore of the
screw. There will be two heating zones called barrel zone & die zones. Raw material
will be passed from hopper to first barrel zone where source constant temperatur4e
will be maintained to bring the raw materials in tb the form of paste. Raw materials
will be passed from barrel zone to die zone. Where the raw material come to require
conditions form the pie cool water will be supplied on the through out the length of
pipe hard shape pipes will be separated by cutter in required length of 6mts.
Manufacturing process in sujala pipes pvt.ltd,
Firstly take 100kg PVC.
add Calcium Carbonate & one pack stablizers at 700 temparuture
Then mix at 1250 heat of that mixture
cool up to 450
This mix will transfer through Vaccum Tubes through feeder
take this mixture through vaccum tubes at any place in the feeder machine
transfer through 5 zones those are heat in tempature at 1250 to 1900
Feeder zone
Comparison zone
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Melting zone
Degases zone
Dry zone
In this connecting lead is there which causes to pull the pipe then cool haul off: it
is used to pull the pipes uniform ally.
QUALITY CONTROL MEASURES
Wall thickness is checked by Screwguage.
Outer Diameter is checked by Venire Calipers pipe Tape.
The above are heat at 1300 temperature & 90mm length to 98mm.
4985 TESTS ON SUJALA PIPES MEASURING FOR QUALITY

While testing in lab after preparing pipes their weightage, temparuture, oiling bag tests.
After these conducting these tests introduce in market for sale
THERE ARE THREE TYPES OF TESTS THOSE ARE
I. Impact Test
II. Hydrostatic Test
III. Reversion Test
I. Impact test
In this test we have to measure pipe length with Weighting Machine
.In this we have to strike the pipe with 25 strokes on 3 lines measuring scale.
After doing this keep the pipe in cooling place.
In this we have to take 2 types of cooling measures those are

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I. De Fridge & the

II. Air Conditioners.
These can do with the help of Chillers.
II. Defreedge Processes
In the defreedge we have to take 8.6mm below wall thickness of pipe & time
duration is 2 hours & temperature upto 0 0 to +/- 10centigrade (c).
When the pipe piece 200mm we have to defreedge with +/- with 10mm. In this
we have to cut the 200 pipe with 10mm & stay in cool with 1 hour.
III.Hydrostatic Test Processes
1. Short term test
2. Long term test
1) In the first test we have to maintain temperature 250 c & water temperature
duration is 1 hour.
2) In the second test we have to maintain temperature 60 0 c & water temperature
duration is 100 hours or 42 days.
IV.Testing
In this test we have to cut the pipe piece in 750mm and fit the end gaps in water.
One side redcap fill with water & the other side with white cap for closing the edges of
pipe.
We have to forecaster this test with weather forecasting machine to know the water
pressure while putting pipes in water formula for measuring this is as follows:
4.19*normal pressure
e.g.: 4.19*4 we have to get 16.73 approximately. 17Watts Pressure.
V.Reversion Test Processes

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In the above testing the pipes are coming outside with a heat of 190 0temparuture
to overcome that elasticity temperature we have to introduce this test. In this test we have to
take 200mm piece of pipe. cut this pipe into 2 pieces & locate front side 10mm & opposite
side 20mm put those pipes in reversion test oil bag. In this there is oil content name is
Transformer oil /Glistering mineral oil. We have to test this with the temperature with 150 0 to
+/- 200.
In 8.6mm pipe piece we have to test temperature with below 50 0 c in oil bag above
8.6mm to 14mm,& the time duration is 1 hour above for 14.1mm to 17mm 1 hour time
duration is necessary. After doing this cool those pipes in room temperature.
Sink age is lie below 5% & above 5% we have to put it in hydrostatic (i.e., water) pressure.
Ingredients of PVC pipes
PVC (poly vinyl chloride)
Tri basic lead sulphate(TBCS)
Die basic lead sulphate (DBLS)
Calcium steric
Lead steric
Calcium carbonate(Ca Co3)
Titanic dioxide
Steric acid
Wax
The above material is mixed in fixed proportion in a big container and they get
processed in to a solidified product. Immediately pipes of various diameters are
manufactured by using various moulds. Once the pipes are manufactured they will be
shifted to warehouse. As and when the requirement comes, they will be dispatched to

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the designated place.

NANDI RIGID PVC PIPES AT A GLANCE
Color
Light Grey
Length
6 Mtrs
Pressure
2.5Kg, 4Kg, 6Kg, 10Kg / Cm2 and 15Kg/Cm2
Manufactured with ISI mark - IS4958: 2000
Range available -
20mm to 400 O.D
NANDI GROUP OF PRODUCTS

Nandi PVC Products
Nandi special Blue Casing Pipes
Nandi Electrical PVC Pipes
Nandi S.W.R. Pipes
Nandi Submersible Pipes
Srikanth water containers
Nandi Flex Pipes
Nandi Garden Tubes
Nandi Krishi Pipes
Nandi LDPE Pipes
Nandi HDPE Pieps
Nandi Drip Irrigation Pipe
Mahanandi SWR fitting
Nandi solvent cement.
Mahanandi Mineral Water
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Nandi milk dairy products

S.P.Y.REDDY Educational Institutions.
Nandi super market.
BENEFITS OF NANDI RIGID PVC PIPES
Economy
Being cheaper than conventional cement and steel pipes. NANDI RIGID PVC
PIPES are very economical.
Light weight
PVC pipes are 1/6th the weight of steel pipes. This makes them easy to carry and
install doing away heavy material handling equipment. This reduces labor cost as well,
as the process of installation is faster.
Rugged and Durable
Manufactured out of the best PVC material, NANDI RIGID PVC PIPES do not
get rust and are not affected by most chemicals. Hence, they last longer, render troublefree service and require less maintenance.
More flow
Frictional losses in NANDI RIGID PVC PIPES are 40% lower than
conventional pipes. Hence there is approximately 25% more flow than from pipes of
the same size.
Raw material
The important raw materials in manufacturing of PVC pipes Resin (Poly vinyl
chloride)

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TBLS (Tri Basic lead Sulphate)

DBLS (DI Basic Lead Sulphate)
CS (Calcium Steric)
LS (Lead Steric)
Quality inspection
After manufacturing PVC pipes as per ISI standards following tests will be
conducted to confirm the quality.
Reversion test
V.S.T
Impact test at OOC
Internal hydrostatic test
Opacity test
Type test at 600C
Sulphated Ash Content
Effect on water test
Warranties
Warranties are given to customers except an assurance that the product is
reliable for 18 months.
Payment period
For Nandi brand zero credit policy adopted by the company and goods are not
delivered unless cash refinance are made. For monarch and sugar brands credit is
entitled up to a week. The difference between these brands is due to brand image.
Transportation
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Transportation of SUHALA PIPES is very admirable. This unique strength of

organization enables delivery to be efficient. This even helps the dealers to reduce
inventory levels to the minimum.
Operations
To ensure optimum use of human resources currently employed.
To determine of forecast future skill requirements.
To provide control measures to ensure that necessary resources are available
and when required.
To avoid unnecessary dismissals.
To ascertain future housing needs of employee
MODELS PIPES
1. Agricultural Pipes
Water, is indispensable for agriculture. However, only 15% of agricultural land, the world
over, gets dependable water supply. In India too, only a fraction of cultivated land gets
dependable supply of water. Pipes is an effective way of overcoming the problem caused by
canal irrigation as they can be laid underground and moreover, water loss due to percolation
and evaporation is eliminated. Lift irrigation is employed to draw water from a lower to a
- 26 -
higher level. Here, various kinds of pipes are used. Nandi Rigid PVC Pipes with their good
quality, trouble free service, durability and economical use are a better choice than mild steel,
galvanized steel, cast iron and plastic pipes
2. Electrical Pipes
Apart from manufacturing UPVC pipes M/s.Sujala Pipes Pvt Ltd, is specialized in the
manufacture of entire gamut of other standard products including Electrical conduits,
plumbing SWR pipes covering all applications in which PVC pipes can be used meeting the
ISI requirements. or the past about three decades, Nandi Pipes(p) Ltd., Nandyal had been
manufacturing UPVC Electrical Conduits under the brand names Nandi, Nandi Premium,
Nandi Delux, Nandi Gold, Nandi Platinum and Nandi Diamond using cutting-edge
technologies to keep pace with the modern technology and the choice of the customers. The
company believes in total Quality Control measures and as a part of it each pipe is thoroughly
checked at the manufacturing stage, so as to ensure that customer is supplied with good
quality product. The company's Electrical Conduits are of ISI Standards and used for
domestic & industrial purposes, the pipe sizes ranging from 16 mm to 63 mm to outer
diameter.
3. SWR Pipes
Nandi Pipes Pvt Ltd.,Nandyal, a unit of Nandi Group of companies, has been
manufacturing 'NANDI' brand Unplasticized Polyvinyl Chloride(UPVC) Plain and Socket
- 27 -
end pipes with nominal outside diameter from 75.90 ,110 & 160mm. These pipes are used in
soil and waste discharge system inside the building including ventilating and rain water
applications. The pipe's surface colour is dark shade of gray. Pipes are made and supplied in
nominal lengths of 4,6,8 and 10 feet either plain or with solvent typed socket/'O' ring typed
grooved socke
The company's Nandi Gold brand SWR Pipe enjoys ISI recognition
(IS: 13592-1992). The Company also manufacturers SWR pipes under the brand names of
Nandi Premium and Nandi Deluxe as per customer's choice and requirements. These pipes
are manufactured with virgin material only.
Ring fit Pipes
An innovative new product Integrated Thermoplastics Ltd., a unit of Nandi Group of
Companies had developed Ringfit pipes to overcome problems commonly experienced in
solvent cement joining of higher diameter (above 160 mm) UPVC Pipes.
These Nandi Gold branded Ring fit pipes offers excel lent advantages over other
UPVC pipes specially for undergoing applications. Pipelines Utilizing Ring fit pipes can be
taken up for pressure testing immediately on completion of the section. Unlike for solvent
cement joints, the waiting period required for solvent cement joining is entirely eliminated,
resulting in short installation duration. Ring fit pipes are easy to install in the field. Ring fit

- 28 -
pipes of diameters below 140 mm can be joined by hand pressure. For large sizes a pipe jack
is available for the purpose.
5. Plumbing Pipes
The Company also manufactures Grey Color plumbing pipes as per ISI standards
IS:4985-2000

- 29 -
INTRODCTION
PVC pipes polyvinyl chloride pipes have become synonyms with modern living. It is
undoubtedly a product which has deeply penetrated into common mans life. No wonder the
industry has achieved remarkable goal. Plastics are perceived as just simple colorful
household products in the minds of common person. A dominant part of plastics present and
future improved their utilization in the following areas.
Agriculture, forestry and water management. Automobile and transportation,
Electronics and Tele communications, building. Construction and furniture especially food
substitutes. Food processing and packaging. Power and gas distribution.
Sujala Pipes PvtLtd.,Nandyal was incorporated in the year 1979 in the industrial
estate Nandyal and this was promoted by MD. Mr.S.Y.Reddy. BE(Mechanical), who has
decades of experience in manufacturing industry. The brand name is Nandi Pipes. The
- 30 -
name Nandi derives from the historical aspects of this town Nandyal. The brand name as
taken from the pilgrimages place called Mahanandi which is 15 km from Nandyal.
STATEMENT OF THE PROBLEM
The Company Sujala Pipes Pvt Ltd has been supplying variety of pipes through out
India. Even though it has a good Net work. The company faces different problems like
lack of dealer satisfaction, differences in customers perceptions, lack of financial appraisal
techniques, ineffective inventory management techniques and the like.
Inventory is the main source of the pipes limited. There is no proper management in
inventory, the company shall not meet the customers desires and does not satisfy the
customers and their demands. Hence, the study concentrates on various techniques adopted
in the management of inventory in the organization.
NEED FOR THE STUDY
Though the Company has several departments the under researched area is finance
and less number of studies have been conducted on inventory management in the company.
The company does not follow any scientific inventory management system and there raised a
need to device a system which could reduce costs aconstitutingowar profitability and also
provides to maintain a proper system in inventory of the organization.
REVIEW OF LITERATURE
The data has been collected for the study from various books and websites
Books
According to Khan M.Y &Jain P.K, Management accounting is concentrated on
various financial management and Inventory management decisions elaborately.
According to Man Mohan & Goyal S.N, Principals of Management accounting is
concentrated on various financial management and Inventory management decisions
elaborately.

- 31 -
According to V.K.Bhalla, working capital Management is concentrated on various

financial management and Inventory management decisions elaborately.
According to C.Vann home, financial Management is concentrated on various
financial management and Inventory management decisions elaborately.
According to I.M.Pandy & Prasanna Chandra home, financial Management is
concentrated on various financial management and Inventory management decisions
elaborately.
Websites
www.inventorymanagement.com gives about inventory concepts, status, and significance.
www.inventorymanagementreview.com gives about inventory concepts, status, and
significance.
www.infliwinventory.com gives about inventory concepts, status, and significance.
www.effective inventory.com gives about inventory concepts, status, and significance.
OBJECTIVES OF THE STUDY
The main objectives of the study are :
To analyze the present practices adopted in inventory management and inventory of

raw materials.
To elicit the maximum utilization level of raw material and inventory in the company.
To ensure effective inventory management techniques for the company for smooth
survival.
RESEARCH METHODOLOGY
There are nine branches located in India, three are located in Karnataka, one in Tamil
Nadu, one in Kerala, one in Maharastra, one in Pondicheri, one in Orissa and one in Andhra
Pradesh, which is the Head Office located in Nandyal. Among all these branches, the
selected branch of Sujala Pipes pvt Ltd was incorporated at Nandyal in Andhra Pradesh. The
- 32 -
executives and Finance department officials are enquired for the purpose of the study.A study
is mainly based on the descriptive research design. This design largely interprets the already
available information. It makes up of secondary data.
DATA SOURCE
The data for the present study is collected through primary and secondary sources.
Secondary data is obtained from the annual report of Sujala Pipes Pvt Ltd. Nandyal and also
from internal reports of the company from time to time and primary data collected by
interacting financial executives of the company
PRIMARY DATA
The primary data of this study was collected by consulting account officer of that
company through oral interviews and queries
SECONDARY DATA
The study is mainly based on the source of secondary data. The secondary data
forthis study was collected from the published sources i.e., annual reports, records of Sujala
Pipes Pvt Ltd, and www.sujalapies.com.
SCOPE OF THE STUDY
The present study is confined to only Sujala Pipes Pvt Ltd., located in Nandyal. The
study is limited to raw material, finished stock of goods only. The study has been analysed
by taking the information related to both the present and past data with reference to the
performance of the company.
PERIOD OF THE STUDY
The present study is confined to five years from 2003-04 to 2007-08
TOOLS FOR THE STUDY
The data relating to the performance of the Sujala Pipes Pvt Ltd., from different
activities that is operating, investing and financing activities have been carefully analysed by
- 33 -
using the financial tools. The financial tools used in the present study are Economic Order
Quantity, Inventory turnover ratio, Ordering cost, Carrying cost, Holding period, ABC
analysis and the like.
LIMITATIONS OF THE STUDY
The major limitations found in the study period are:
Time and finance of the limiting fact for the study.
For ABC analysis consumption of raw material is only taken and EOQ main raw
material are only considered.
Some of the information is kept confidential and has not been disclosed by the
executives.
This study is further limited to Raw material and packing material only.
CHAPTER LAYOUT
The study confines to SIX Chapters :
Chapter-1
Plastic Industry A Profile.
Chapter 2
Sujala Pipes Pvt Ltd.,- A Profile
Chapter 3
Research Methodology and Design
Chapter 4
Inventory management A Review
Chapter 5
Data Analysis and Interpretation
Chapter 6
Conclusions, Findings and Suggestions

- 34 -
INTRODUCTION
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a
physical stock of goods kept for the purpose of future affairs. a term is generally used to
indicate raw materials in process, finished products, packing, spares and others stocked in
order to meet expected demand or distribution in the future. Through inventory of materials
is an idle resource it is not meant for immediate use it is almost essential to maintain some
inventories for the smooth functioning of an enterprise.
For example, let us consider an enterprise that has no inventory of materials at all.
When this enterprise receives a sales order, it will have to order out the raw material required
to complete the order, wait till these arrive and then start production. This would kept the
customers invariably to wait too long for the delivery of the goods ordered. Among other
disadvantages of not maintaining the inventories, the enterprise may have to purchase the raw
materials at very high prices because of piece-meal buying: the production costs would also
- 35 -
be high because of not being able to take advantage of batching; the load on manufacturing
shops would vary from period to period depending upon the orders on hand; the load on
manufacturing shops would vary from period to period depending upon the orders on hand;
the company may not be able to provide adequate customer service in the matter of
completion, waiting and price.
Meaning of Inventory
The dictionary meaning of the word inventory is detailed list of movable goods, but
in management inventory is used to designate the aggregated of those items of tangible
property, which are held for sale ordinary course of business thus the inventory means stock
of items kept in reserve for certain period of times, it includes raw materials, work in progress
or semi finished goods, finished goods and spare parts for the maintenance of equipment, etc.,
Raw Materials
These are the basic inputs, which are converted into finished product through
manufacturing process.
Raw materials, inventories are those units, which have been
purchased and stored for future production.

Work in Progress
Materials issued to the stop floor which have not yet become finished products, they
are value added materials to the extent of labor cost incurred.
Finished Goods
Finished goods are those which are ready for sale.
Definitions of Inventory
JOHN HAMPTON treats inventories, as Locked up capital. Inventory measured by
rupee value constitutes the major element in the Working Capital (approximately 60% of
current assets).

- 36 -
Good inventory management is nothing but good financial management according to

S.C.KUCHAL.
Types of Inventory
Inventory can be classified in to five basic types on the basis of their production.
These various types of inventories cannot be identified and segregated within the
organization. As such types will not be represented in all organization.
These five types are
Management inventory
There are needed because of the time required to move stocks from one place to
another.
Lost Size inventory
These are result of buying materials in quantities larger than the immediately
requirement, with a view to minimizing cost of transportation, buying, receipt and handling
and to obtaining quantity discount
Fluctuation inventory
These are carried to ensure ready suppliers to consumer even when these are irregular
and unpredictable fluctuation in their demand.
Anticipation inventory
These are usually maintained to meet a predictable but changing pattern of future
demand.
Cycle inventory
These result from management attempt to minimize the total cost of carrying and
ordering inventory. They arise from ordinary in batches or lots, rather from needed basis.
PURPOSE OF INVENTORIES

- 37 -
The overall goal of inventory management is to feed the production with right
quantity of raw materials with right quality at right time. The purpose of holding inventories
is to allow the firm to separate the processes of purchasing, manufacturing and marketing of
its primary products. The goal is to achieve efficiencies in areas where costs are involved and
to achieve sales at competitive prices in the market place.
With in this broad statement of
purpose we can identify specific benefits that accure from holding inventories.
Avoiding Lost Sales
Without goods in hand which are ready to sold, most firms would lose business. In
most cases, a firm must be prepared to deliver goods on demand.
Gaining Quantity Discounts
In return for making bulk purchases, many suppliers will reduce the price of supplies
and component parts. The willingness to place large orders allow firm to achieve discounts
on regular prices. These discounts will reduce the cost of goods sold and increase the profits
earned on a sale.
Reducing Order Costs
Each time places on order, it incurs certain expenses. Forms have to be completed;
approvals have to be obtained and goods that arrive must be accepted, inspected and counted.
Later an invoice must be processed and payment made. Each of these costs will be very with
the number of orders placed. By placing fewer orders, the firm will pay less to process each
other.
Achieving Efficient Production Runs
Each time a firm sets up workers and machines to produce on it, start up costs is
incurred. This are then absorbed as production begins. The longer the runs the smaller the
cost of begin producing the goods.
Reducing the risk of production shortages
- 38 -
Manufacturing firms frequently produce goods with hundreds even thousands of

components. If any of these are missing the entire production operation can halted, with
consequent expenses. To avoid starting a producing run and then discovering the shortage of
a vital raw materials or other component, the firm can maintain larger than needed
inventories.
These benefits arise because inventories provide a buffer between purchasing,
producing and marketing of goods.
Raw Materials and other inventory items can be
purchased at appropriate times and in proper amounts manufacturing process can occur in
sufficiently long production runs and with pre-planned schedules to achieve efficiency and
economics. The sales force can respond to customer needs and demands based on existing
finished goods. To allow each area to function effectively, inventory separates the area to
function efficiency and economics. The sales force can respond to customer needs and
demands based on existing finished goods, to allow each area to function effectively,
inventory separates the areas to function effectively; inventory separates the three functional
areas and facilitates the interaction among them.
REASONS FOR CARRYING INVENTORIES
The need of management to make decisions regarding inventory arises because of
alternative courses of action (Strategies) available to any firm or organization. Thus a set of
decision rules are sought which satisfy an objective function (such as available facilities,
availability of finance etc.,) imposed by the firm policy. Hence it becomes essential for an
enterprise (firm) to have inventory because of the following reasons.
It helps in smooth and efficient running of business.
It provides adequate service to customers.
It reduces the possibility of duplicating of orders.

- 39 -
It helps in maintain economy by absorbing some of fluctuations when the demand for
an item fluctuates or is seasonal.
It helps in minimizing the loss due to deterioration, obsolescence, damage or pilferage
etc.,
It acts as a buffer stock when raw materials are received late and shop rejections are
too many.
Takes advantage of price discounts by bulk purchasing.
It reduces the cost of product because of an added advantage of batching and long,
uninterrupted production runs.
It improves the manpower, equipment and facility utilization, by better planning and
scheduling.
Though the inventories are essential and provide an alternative to production/purchase
in future, they also mean locking up capital of an enterprise. Maintenance of inventories
also costs money by way of expenses on stores, equipment, personnel, insurance etc., Thus
excess inventories are undesirable. This calls for controlling the inventories in the most
profitable way.
NEED FOR CARRYING INVENTORIES
It helps in smooth and efficient running of business.
It provides adequate service to customers.
It reduces the possibility of duplicating of orders.
It helps in maintaining economy by absorbing some of fluctuations when the
demand for an item fluctuates or is seasonal.
It helps in minimizing the loss due to deterioration, obsolescence, damage or
pilferage etc.

- 40 -
It acts as a buffer stock when raw materials are received late (and shop rejections
are too many.)
Takes advantage of price discounts by bulk purchasing
NEED TO HOLD INVENTORY

Maintaining inventories involves tying up of the companys funds and in currency of
storage and handling costs. There are three general motives for holding inventories.
Transaction Motive
Emphasizes the need to maintain inventories to facilitate smooth the production and
sales operations.
Precautionary Motive
It necessitates holding of inventories to guard against the risk of unpredictable
changes in demand and supply forces and other factors.
Speculative Motive
It influences the decision to increase or reduce inventory levels to take advantage of
price fluctuations.
THE MAJOR DANGERS OF OVER INVESTMENT IN INVENTORIES ARE
Unnecessary tie up of the funds and loss of profit.
Excessive carrying cost.
The risk of liquidity.
THE CONSEQUENCES OF UNDER INVESTMENT IN INVENTORIES ARE
Production hold- ups
Failure to meet delivery commitments inadequate raw materials

- 41 -
Work-in-process will result in frequent in production interrupts.

AN EFFICIENT INVENTORY MANAGEMENT SHOULD
Ensure a continuous supply of raw materials to facilitate uninterrupted production.
Maintain sufficient supply of raw materials in periods of short supply and anticipate
price changes.
Maintain sufficient finished goods inventory for smooth sales operation and
efficient customer service.
Minimize the carrying cost on time.
Control investment in inventories and keep it at an optimum level.
TOOLS OF THE INVENTORY MANAGEMENMT
ABC analysis.
Economic Order Quantity
Materials Turn over Ratio
ABC Analysis
This analysis is based on the annual consumption value. It is based on Paretos law.
Under this analysis all items of stores are classified into three main categories A, B and
C.10% of the total number of items account for about 70% of the total consumption value.
These items are called A items. 20% of the total number of items account for about 20% of
the total consumption value these items are called B items. The remaining number of items
account for the balance 10% of the total issue value, these items are called C items.
Procedure
The procedure of classifying the items into A, B and C categories is described in
the following steps.

- 42 -
Calculate rupee annual issues for each item in inventory by multiplying the until cost
by the number of units issued in a year.
It is assumed that the issues and
consumptions are the same.

Sort all items by rupee annual issues in descending sequence.
Prepare a list from these ranked items showing item number, unit cost, annual units
issued and annual rupee value of units issued.
Starting at the top of the list, compute a running total, item issue value and the rupee
consumption value.
Compute and print for each item the cumulative percentages for the item count and
cumulative annual issues value.
10 percent of the top number of items account for about 70 percent of the total
consumption value. These items are called A items. 20 percent of the number of
items account for 20 percent of the total consumption value. These items are called
B items. The remaining number of items account for the balance 10 percent of the
total issue value. These items are called C items.
Differences between A, B and C class items
S. No
1.
A Items
High Consumption Value
2.
3.
Very strict control

Very Low safety stocks
4.
Frequent ordering or weekly

deliveries
Accurate
forecast
in
materials planning
Minimization of waste and
surplus(review every 15
days)
Maximum efforts to reduce
lead time
5.
6.
7.
B Items
Moderate
Consumption value
Moderate Control
Low safety stocks
C Items
Low consumption value
Loose control
High safety stocks
Once in three months
Bulk ordering once in 6

months.
Estimates based past data Rough estimates for
on present plans
planning
Quarterly control over Annual review over
surplus and obsolete items surplus and obsolete
material
Moderate effort
Minimum
clerical
efforts.
Economic Order Quantity (EOQ)

- 43 -
The inventory problems in which demand is assumed to be fixed and completed

predetermined are usually referred to as the EOQ or lot size. It is also termed as re-order
quantity. When the size of order increases, the ordering cost will decrease whereas the
inventory.
Carrying costs will increase. Thus in the production process there are two opposite
costs, one encourages the increase in the order size and the other discourages. EOQ is that
size of order which minimizes total cost of carrying inventory and cost of ordering.
Q
(2*D*S)/H
Where K= annual demand

C= carrying cost
H= holding cost
EOQ can be calculated with the help of a mathematical formula.
Following assumptions are applied in the calculation
1 Demand for the product is constant and uniform through out the Period.
2 Lead time (time from ordering to receipt) is constant.
3 Price per unit of product is constant.
4 Inventory holding cost is based on average inventory.
5 Ordering cost is constant.
6 All demands for the product will be satisfied (no back orders are allowed).
T.C = DC + [(D/Q) *S] + [ ( Q/2)*H]
Where T.C = Total cost
D = Annual demand
C = Purchase cost per unit
Q= Quantity to be ordered
S= Cost of placing on order
- 44 -
H= Holding Cost per unit of average

Inventory per Annum
From the figure we can say that total cost is minimum at the point where cost of
ordering is equal to holding cost.
((D*S)/Q) = (Q/2)*H
D*S = ((Q*Q)/2)*H
Q^2 = (2*D*s)/H
Q
= Q (2 D S)/H
The graph showing The Procurement & Consumption cycle
MAXIMUM
VALUE
AVG
STOC
K
REORDERING
POINT
EOQ
SAFETY
STOCK
Lead Time
TIM
E
INVENTORY TURNOVER RATIO

It is a ratio of materials consumed during a period to the average stock of materials
during the period. It indicates the efficiency of the firm in producing and selling its products.
Inventory Turnover Ratio = Materials Consumed
Average Inventory
- 45 -
The reciprocal of inventory turnover gives average inventory holding in percentage

term. When the number of days in a year (say 360) is divided by turnover, we obtain days of
inventory holdings (DIH).
DIH= No. of days in a year
Inventory Turn Over Ratio
CLASSIFICATION AND CODING
Good store keeping requires proper classification and codification of various items
stores in stock.
Classification of Inventory
Classification of inventory is the first step to determine optimum inventory levels. As
already seen one way to classify them as raw materials, machinery spares, semi finished,
work in progress and finished goods. Another ways to classify each of the above as ABC,
VED etc.
Codification of Materials
Codification is the procedure of assigning distinctive symbols for each item of store.
Such symbols may be numeric or alphabetic or a combination of the two. These symbols are
known as codes. Thus each material is also known by a code in addition its own name.
[
Advantages
Systematic grouping of similar items for correct identification of each and every
item.
The usage of long description is simplified and possible confusion avoided.
Avoid duplicate stock of the same item being held under different names,
description, brand names, part number and different stores.
Enable reduction in sizes and varieties.
Ensures accuracy in posting of receipts and issue in appropriate records.
STOCK LEVELS
- 46 -
For efficient material control and to avoid overstocking and under stocking of
materials, an important requirement is to decide upon various levels of materials, these levels
are minimum level and re-order level. By making action on the basis of these levels, each
item of material will automatically be held with in appropriate limits of control. These levels
are not permanent but need revision according to the changes in the factors which determine
these levels are not permanent but need revision according to the changes in the factors which
determine these levels.
Factors
The Following factors help in the fixation of these levels.
Rate of consumption of materials.
Lead the time, i.e., time lag.
Storage capacity.
Availability of funds for investment in inventories.
Cost of storage.
Risk of loss due to deterioration theft fire etc.,
Seasonal factors certain materials are cheaply available during certain seasons.
Fluctuations in market prices.
Insurance costs.
Maximum Level
The maximum stock level is that quantity of material above which the stock of any
item should not generally be allowed to go up. This maximum level may be exceeding
certain special cases, For instance, if a particular lot is purchased at a reasonably low price,
the maximum level may be crossed.
This level is fixed after taking into account such factory as:

- 47 -
Rate of consumption of material.
Amount of capital needed and available.
Storage space available.
Incidence of insurance costs which may be important for some materials.
Costs of storing above normal stock.
Risk of obsolescence and deterioration and
Re-order quantity.
Danger Level
It is that level below which stock should not be allowed to except under emergency
conditions. When stock reaches this level urgent action for purchases is initiated.
Danger Level= Average Consumption*Maximum Re-order Period
For Emergency period
Danger level is below the minimum level. But some firms prefer to fix the danger
level above the minimum level and below the re-order level. However fixing danger level
below the minimum level is meant for taking corrective action where as fixing it above the
minimum level is for preventive action.
The Formula for computing maximum level is follows.
Maximum Level=
Re-order Level + Re-order quantity

Minimum Consumption * Minimum Re-order Period
Minimum Level
The minimum level is that level of stock below which it should not normally be
allowed to fall. This is essentially a safety stock and will not normally be touched. In case of
any item falling below this level, there is danger of stoppage in production and, therefore,
management should give top priority to the acquisition of new supplies. This level is fixed
after the consideration if the following factors.

- 48 -
Rate of Consumption.
Minimum level.
Delivery Time.
Variation in delivery time.
Re-order Level= (Maximum Consumption * Maximum Re-order Period)
Average Stock Level
This is computed with the help of the following formula.
Average stock level = Minimum level+ (1/2 of Re-order quantity) or
Average stock level = (1/2)* (Minimum level+ Maximum level)
TYPES OF INVENTORY CONTROL
Classification of inventory is the first step to determine optimum inventory levels. As
already seen one way to classify them as raw materials, machinery spares, semi finished,
work in progress and finished goods. Another ways to classify each of the above as ABC,
VED etc.
ABC
HML
VED
FSN
TWO-BIN
SDE
EOQ
MAXMIUM MINIMUM
MEANING OF INVENTORY CONTROL

- 49 -
Inventory control is a system, which ensures the provisions of the required quality of
inventories of required quality at the required time with the minimum amount investment.
Thus the function of inventory control is to obtain the maximum inventory turn over with
sufficient stock to meet all requirements.
NEED TO HOLD INVENTORY CONTROL
Demand inventories have a tendency to grow beyond economic limits, tie-up funds
and increase the cost of maintenance or carrying cost.
Non-availability of inventory involves cost of stock outs, reordering costs and
additional transit cost.
Central core idea for material management is inventory control.
To minimize the locking of funds or working capital commitments.
To determine the working capital operating cycle is essential.
Depending upon the operating cycle the company requirements for locked up funds
will follow. The length of operating cycle depends upon the nature of business, production
policies, manufacturing process, terms of purchase and conditions of sales and demand.
PURPOSE OF INVENTORY CONTROL
The need of controlling inventory is expressed as below :
To improve customer services.
Permits purchase and transaction economies.
Transportation economies.
Hedge against price fluctuations.
Production economies.
Hedge against demand uncertainties
Protects against demand and lead time uncertainties.

- 50 -
FACTORS INFLUENCING INVENTORY CONTROL

To control the inventory
How much to buy at one time ?
When to buy this quantity ?
Following four fundamental factors govern for these questions.
Requirements break down time wise.
Quantity in stock or an order.
Procurement time or lead time.
Obsolescence.
FACTORS TO BE CONSIDERED WHEN ESTABLISHING THE CONTROL
LEVELS
Average consumption or production requirements
Reordering periods-the time between raising an order and receiving delivery of goods
Storage space available
Market conditions
Economic order quantity
Likely life of stock-bearing in mind the possibility of loss through deterioration or
obsolescence and
The cost of placing orders including generating and checking the necessary paper
work as well as physical checking handling procedures.
The key issue for a business is to identify the fast and slow movers with the objectives
of establishing optimum stock levels for each category and, thereby minimize the cash tied up
in stocks.
Control policies should include designating responsibility for raising and

- 51 -
authorizing orders, signing delivery notes and authorizing orders, signing delivery notes and
authorizing payment of invoices.
INVENTORY ANALYSIS METHODS
ABC Analysis
This analysis is based on the annual consumption value. It is based on Paretos law. Under
this analysis all items of stores are classified into three main categories A, B and C.
10% of the total number of items account for about 70% of the total consumption value.
These items are called A items. 20% of the total number of items account for about 20%
of the total consumption value these items are called B items. The remaining number of
items account for the balance 10% of the total issue value, these items are called C
items.
Economic Order Quantity
The inventory problems in which demand is assumed to be fixed and completed
predetermined are usually referred to as the EOQ or lot size. It is also termed as re-order
quantity. When the size of order increases, the ordering cost will decrease whereas the
inventory.
Carrying costs will increase. Thus in the production process there are two opposite
costs, one encourages the increase in the order size and the other discourages. EOQ is that
size of order which minimizes total cost of carrying inventory and cost of ordering.
Q=
(2*D*S)/H
Where K= annual demand

C= carrying cost
H= holding cost
VED Classification

- 52 -
This analysis is based on criticality of inventories.
It is used to determine the
criticality of an item and its effect on production and other services. It is specially used for
classification of spare parts. If a part is vital, it is given V classification, if it is essential,
then it is given E classification and if it is not essential, the part is given D classification.
For V items, a large stock of inventory is generally maintained, these items have immediate
effect on production and more attention paid for these items.
HML Classification
The High, Medium and Low (HML) classification follows the same procedure as is
adopted in ABC classification. Only difference is that in HML, the classification unit value is
the criterion and not the annual consumption value. The items of inventory should be listed in
the descending order of unit value and it is up to the management to fix limits for three
categories. For example, the management may decide that all units with unit value of Rs.
2000 and above will be H items, Rs. 1000 to Rs. 2000 M items and less than Rs. 1000, L
items.
The HML analysis is useful for keeping control over consumption at departmental
levels for deciding the frequency of physical verification, and for controlling purchases.
SDE Classification
The SDE analysis is based upon the availability of items and is very useful in the
context of scarcity of supply. In this analysis. s refers to scarce items, generally imported,
and those which are in short supply. D refers to difficult items which are available
indigenously but are difficult items to procure. Items which have to come from distant places
or for which reliable suppliers are difficult to come by fall into D category. E refers to
items which are easy to acquire and which are available in the local markets.
The SDE classification, based on problems faced in procurement, is vital to the lead
time analysis and in deciding on purchasing strategies.
- 53 -
FSN Analysis
FSN stands for fast moving slow moving and non-moving. Here, classification is
based on the pattern of issue from stores and is useful in controlling obsolescence. To carry
out an FSN analysis, the date of receipt or the last date of issue, whichever is later, is taken to
determine the number of months, which have lapsed since the last transaction. The items are
usually grouped in periods of 12 months. FSN analysis is helpful in identifying active items
which need to be received regularly and surplus items which have to be examined further.
Non-moving items may be examined further and their disposal can be considered.
Minimum Maximum Technique

The Minimum Maximum system is often used in connection with manual inventory
control systems. The minimum quantity is established in the same way as any re-order point.
The maximum is the minimum quantity plus the optimum lot-size. In practice, a requisition
is initiated when, a withdrawal reduces the inventory below the minimum level, and the order
quantity is the maximum minus the inventory status after the withdrawal.
If the final
withdrawal reduces the stock level substantially below the minimum level, the order quantity
will be higher than the calculated EOQ. The effectiveness of a minimum-maximum system is
determined by the method and precision with which the minimum and maximum parameters
are established.
Two-Bin System
One of the oldest systems of inventory control is the Two-bin system which is mainly
adopted to control C group inventories. In the two-bin system, stock of each item is
separated into two bins. One bin contains stock, just enough to last from the date a new order
is placed until it is received in inventory. The other bin contains a quantity of stock, enough
- 54 -
to satisfy probable demand during the period of replenishment. To start with, the stock is
issued from the first bin. When the first bin is empty, an order for replenishment is placed,
and the stock in the second bin is utilized until the ordered material is received.
Such a method is appropriate to ideal conditions in which the rate of consumption is
fairly constant and for items, the lead time of which is fairly established and regular.
Although the system itself possesses a high degree of automaker, in practice, we need to
allow for variations in the rate of consumption as well as lead time. However, for such a
systems. The most desirable quantity to re-order is the EOQ. Since the quantity to re-order is
fixed in advance, initiation of replenishment action can be delegated to the lower level staff
and there is need to take physical count of inventory levels.
Inventory in wider sense, is defined as any idle resource of an enterprise. It is a

physical stock of goods kept for the purpose of future affairs. a term is generally used to
- 55 -
indicate raw materials in process, finished products, packing, spares and others stocked in
order to meet expected demand or distribution in the future. Through inventory of materials
is an idle resource it is not meant for immediate use it is almost essential to maintain some
inventories for the smooth functioning of an enterprise.
The data has been analysed through various Inventory Turn Over Ratios, ABC
Analysis, Ordering Cost, Carrying Cost, Holding Period, EOQ and the Like.
Table 5.1 gives the inventory turnover ratio of Sujala Pipes Pvt Ltd., for the years
2003-04 to 2007-08.It is the ratio between Cost of Goods Sold and Average Stock.
Inventory Turnover Ratio = Cost of Goods Sold
Average Stock
Table 5.1
INVENTORY TURNOVER RATIO OF SUJALA PIPES PVT LTD.,
YEAR
AVERAGE STOCK
2003-04
COST OF GOODS
SOLD
25657425
254321.54
INVENTORY
TURNOVER RATIO
100.88
2004-05
32456235
532175.4
60.98
2005-06
356588900
243185.428
1466.32
2006-07
112629178.1
10263579
10.97
2007-08
716612780.2
20755354.13
34.52
INTERPRETATION
In Year 2003-04,2005-06 Stocks are Converted into Liquid More Faster When
Compared to the Below Years i.e.,2005,2006,2007&2008.In the Year 2006-07 Turn Over
Ratio is Very Low When Compared to Other Ratios. In the Year 2007-08 Inventory has not
been Sold Fast and Stayed On the Shelf for a Longer Period. It is also predicted in the Graph
5.1.
Graph 5.1
INVENTORY TURN OVER RATIO OF SUJALA PIPES PVT LTD.,

- 56 -
Table 5.2 gives the holding period of Sujala Pipes Private Limited.
Inventory Turn Over Ratio = Cost Of Goods Sold
Average Stock
Holding Period =
Average Stock X 365

Cost Of Goods Sold
Table 5.2
HOLDING PERIOD OF SUJALA PIPES PVT LTD.,
YEAR
AVERAGE STOCK
COST OF GOODS
HOLD
SOLD
2003-04
254321.54
25657425
ING PERIOD
3.61
2004-05
532175.4
32456235
5.98
2005-06
243185.428
356588900
0.24
2006-07
10263579
112629178.1
33.26
2007-08
20755354.13
716612780.2
9.80
INTERPRETATION
In The Year 2003-04, 2005-06 the Holding Period was Very Low When Compared to
Other Period of Years.In the Year 2006-07 Period was Tremendously Increased When
Compared to Other Periods. In The Year 2004-05, 2007-08 the Period was Decreased When
Compared to the Above Year. It is also predicted in the Graph 5.2.
Graph 5.2
- 57 -
HOLDING PERIOD OF SUJALA PIPES PVT LTD.,
Table 5.3 depicts the ABC analysis for the year 2003-04.
Table 5.3
PERCENTAGE VALUE OF A, B, C ANALYSIS FOR THE YEAR 2003-04
ITEM
A
B
C
D
E
F
TOTAL
VALUE IN (Lacs)
4942
3933
2325
435
223
124
11982
AMOUNT IN RS VALUE IN (%)
69.2
12.0
7.45
5.80
3.98
1.57
100
INTERPRETATION
In the year 2003-04 the A class item has more value when compared to other classes
of pipes. Its market value %are as follows: A class item print with red mark its % of sales are
49.02% & B class item print with blue mark its % of sales are 12.20% & C class item print
with green mark its % of sales are 10.50% & D class item print with brown mark its % of

- 58 -
sales are 18.18% & E class item print with yellow mark its % of sales are 5.01% & F class
item print with black mark its % of sales are 5.00%.It is also Predicated in the Graph 5.3.
Graph 5.3
ITEM
VALUE IN (LACS)
AMOUNT IN RS VALUE IN(%)
A
B
39425
2945
70.15
10.45
1435
6.35
D
E
622
565
5.54
4.82
245
2.69
54991
100
TOTAL
Table 5.4 provides ABC analysis for the year 2004-05.

Table 5.4

INTERPRETATION
- 59 -
item print with black mark its % of sales are 5.00%. It is also predicated in the Graph 5.4.
Graph 5.4
Table 5.5 gives percentage value of ABC analysis for the year 2005-06.
Table 5.5
ITEM
VALUE IN (LACS)
28201
AMOUNT IN RS VALUE IN
49.02
9447
12.2
9048
10.5
5334
18.18
1667
5.01
1574
TOTAL
55271
100
(%)
INTERPRETATION

- 60 -
Graph 5.5
Table 5.6 analyse the Percentage of Value of A, B, C Analysis for the Year 2006-07
Table 5.6
ITEM
A
B
C
D
E
F
TOTAL
VALUE IN (Lacs)
29148
19656
13017
5038
1286
4963
73108
AMOUNT IN Rs. Value in (%)

38.61
15.6
22.3
12.22
6.15
5.12
100
INTERPRETATION
of pipes. Its market value %are as follows: A class item print with remark its % of sales are

- 61 -
Graph 5.6
Table 5.7 depicts the percentage value of ABC analysis for the year 2007-08.
Table 5.7
ITEM
VALUE IN (Lacs)
VALUE IN (%)
29779
49.63
12060
20.1
11669
16.68
17131
4.18
1470
14.26
1371
4.15
TOTAL
73480
100
INTERPRETATION
In the year 2007-0 the A class item has more value when compared to other classes of
pipes. Its market value %are as follows: A class item print with remark its % of sales are
- 62 -
Graph 5.7
Table 5.8 gives Percentage of Value of A, B, C Analysis for the Year 2003-08
Table 5.8
ITEM
A
B
C
2004-05
VALUE IN
(%)
2005-06
VALUE IN
(%)
2006-07 VALUE
IN (%)
2007-08 VALUE IN
(%)
69.2
12.0
7.45
5.80
70.15
49.02
38.61
49.63
10.45
12.2
15.6
20.1
6.35
10.5
22.3
16.68
18.18
12.22
4.18
3.98
4.82
1.57
100
2.69
100
5.01
5
6.15
5.12
14.26
4.15
100
100
100
2003-04 VALUE
IN (%)
5.54
D
E
F
TOTAL
INTERPRETATION
In the above 200308 classes of pipes shows that the % of sales are decreased, when
compared to the quality items. The percentage of sales are decreasing /increasing as
according to their consumer tastes & preferences in present market conditions. It is also
predicated in the Graph 5.8
Graph 5.8
Percentage Value of A, B, C Analysis for the Year 2003-08
- 63 -
Table 5.9 gives annual consumption in quantity and in value from the
year 2003-08.
Item
Particulars
Raw
materials
Poly Vinal
chloride
Tri Basic
Sulphate
Die Basic
Lead
2003-04
Qty Value
2004-05
2005-06
2006-07
Qty Value Qty
Value Qty
Value
64.2
45.4
12.42
8
12.4
21.55
5
10.40
26.2
42.05
45.2
10.34
Calcium
16.4
84.62
54.5
Steric
11.4
38.47
49.1
10.27
65.8
0
30.73
12.8
32.95
47.3
10.15
67.2
2
40.15
11.6
10.44
0
31.72
4
98.71
35.6
5
7
74.62
27.2
8
Sulphate
27.84
15.4
24.7
2007-08
Qty
Value
55.8
37.41
4
10.08
69.2
7

- 64 -
10.39
Calcium
Carbonate
Lead Steric
62.4
74.39
26.2
55.62
52.4
24.58
57.2
80.13
23.4
54.26
61.0
85.53
12.4
56.21
69.0
96.62
16.8
75.74
17.9
80.72
Titanic
Dioxide
84.6
56.24
Steric Acid
Wax
64.2
5
46.2
Lubricants
32.6
10.24
62.4
18.42
5
32.4
33.48
14.2
10.56
56.09
21.7
15.62
27.0
10.88
58.5
21.67
23.8
31.1
44.46
42.5
11.94
47.77
26.7
13.36
3
24.92
41.1
32.88
1
32.34
5
92.68
13.6
5
1
53.01
72.86
9
45.62
20.8
1
5
43.19
16.0
2
2
Total
64.57
10
45.2
44.6
33.95
7
98.74
Table 5.9
ANNUAL CONSUMPTION IN QUANTITY AND VALUE FOR 2003-08 (Rs. in crores)
Table 5.10 gives annual consumption in quantity and in value from the
year 2003-08.
Table 5.10
Annual Consumption In Quantity And Value For 2003-08

- 65 -
11.35
Item
No.
Particulars
2003-04
2004-05
2005-06
2006-07
Raw materials :
Value percent
Value percent
Value percent
Value percent
Value percent
Poly VInal
Chloride
28.45
32.56
30.04
31.13
35.37
2.
Tri Basic
Sulphate
1.45
1.62
1.11
1.03
0.92
3.
Die Basic Lead

Sulphate
40.20
38.15
35.55
32.13
32.96
4.
5.
Calcium Steric
Calcium
Carbonate
9.625
8.25
8.260
7.32
10.65
8.65
10.21
8.66
9.15
8.51
6.
Lead Steric
4.32
4.02
6.06
7.67
7.11
7.
Titanic Dioxide
4.25
4.85
6.05
7.38
4.21
8.
Steric Acid
2.25
1.69
1.17
1.21
1.18
9.
Wax
0.75
0.99
0.24
0.25
0.29
10
Lubricants
0.45
0.62
0.48
0.33
0.3
100
100
100
100
100
1.
Total
2007-08
INTERPRETATION
The above table clearly shows that major role of raw materials, are
PVC increase in its value percentage from 28.45 percentage in 2003-04,
32.56 percentage in 2004-05 & 30.04 percentage in 2005-06 to 31.13
percentage in 2006-07 and later increased to 35.37 percentage in 200708. Tri basic sulphate value percentage decreased from 1.45 percentage
in 2003-04, 1.62 percentage in 2004-05 & 1.11 percentage in 2005-06 to
1.03 percentage in 2006-07 and later decreased to 0.92 percentage in
2007-08. The value percentage titanic dioxide increased from 4.25
percentage in 2003-04, 4.85 percentage in 2004-05 & 6.05 percentage in
2005-06 to 7.38 percentage in 2006-07 and later decreased to 4.21
percentage in 2007-08. It is also predicated in the Graph 5.9.

- 66 -
Graph 5.9
ANNUAL CONSUMPTION FOR THE PERIOD 2003-08
Table 5.11 analyses the ordering cost for the period 2003-08
Table 5.11
ORDERING COST FOR THE PERIOD 2003-08
Particulars
20052006200706
07
08
1922566 2467768 2689417
1532457 16543256
8
4
2
8
2422672
77340
1848727 2257498
Transportation
Sales tax
Salaries
Printing
stationary
Insurance
Telephone bills
Total
200304
2004-05
4245674
5645468
487684
2047284
3848705
2537456
2659846
and
2649140 30954773
3
9098308 1349785 1404776

8
9
477284
382258
547765
2572484 9529675 3798589

3717710 2845136 2976286
3751412 5100995 4826458
6
1
1

- 67 -
Table 5.12 analyse ordering cost of transportation for the year 2003-08.
Table 5.12
ORDERING COST IN PERCENTAGES FOR THE PERIOD 2003-08 (Rs.
In Crores)
Particul
ars
Items
2003-04
2004-05
2005-06
2006-07
2007-08
Ord
erin
g
cost
% of
orderi
ng
cost
Order
ing
cost
% of
orderi
ng
cost
Ord
erin
g
cost
% of
orderi
ng
cost
Order
ing
cost
% of
ord
erin
g
cost
Order
ing
cost
% of
orderin
g cost
1.5
3
84.5
8
1.65
89.2
5
1.92
91.10
2.46
91.6
0
2.68
90.76
1.8
4
4.2
4
0.4
8
11.5
2
0.45
2.25
7.00
0.24
6.67
77340
6.32
6.69
5.64
0.65
0.90
0.12
1.34
0.11
1.40
0.18
0.00
2
0.00
5
0.47
0.001
0.38
0.00
5
0.54
0.007
Insuranc
e
2.0
4
3.00
0.38
2.54
2.57
2.09
0.95
1.95
3.79
2.33
Telephon
e bills
2.5
3
0.44
8
0.26
0.55
5
0.37
0.02
0.28
0.02
2.90
0.03
Total
2.6
4
100
3.09
100
3.75
100
5.10
100
4.82
100
Transport
ation
Sales tax
Salaries
Printing
and
strategy
INTERPRETATION

- 68 -
In the year 2003-04, 2004-05, 2005-06 transportation increased

from 84.58, 89.25, and 91.10 percent in 2005-06 to 91.60 percent in
2006-07 and later decreased to 90.76 percent in 2007-08. Sales tax and
salaries decreased from 6.67 percent, 0.12 percent in 2005-06 to 6.32
percent, 0.11 percent in 2006-07 and later increased to 6.69, 0.18 in
2007-08. The printing expenses increased from 0.01, 0.002, and 0.005
percent in 2003-04, 2004-05, and 2006-07 to 0.005 percent in 2006-07
and later increased to 0.007 percent in 2007-08.
The telephone bills
inconstantly from 2005-06 to 2006-07 i.e., 0.02 percent and later

increased to 0.03 in 2007-08.Graph 5.10 shows the results.
Graph 5.10
ORDERING COST FOR THE PERIOD 2003 - 08
Table 5.13 provides ordering cost per order for the year 2003-08 in
Rupees for raw material.
Table 5.13
ORDERING COST PER ORDER FOR THE PERIOD 2003-08 (Amount in
Rs.)
- 69 -
Raw
materials
Poly VInal
Chloride
Tri Basic
Sulphate
Die Basic Lead
Sulphate
Calcium Steric
200304
18455
200405
15645
200506
12,283
200607
10542
2007-08
12540
9468
8378
7952
5699
10455
12456
18756
15225
17102
8462
5463
7362
5722
6924
5250
3261
2053
9732
Calcium
Carbonate
(caco3)
Lead Steric
3120
2610
12460
6761
7933
5261
3739
Titanic Dioxide
8455
7150
5132
4883
32637
Steric Acid
12161
5456
10211
8562
6316
Wax
5140
2450
2156
3622
1152
6152
4540
3172
3325
2992
Lubricants
Table 5.14 gives ordering cost for the year 2003-08 in percentages.
Table 5.14
ORDERING COST IN PERCENTAGE FOR THE PERIOD 2003-08
(Amount in Rs.)
Particul
ars
Raw
materia
ls
Poly
VInal
Chloride
Tri Basic
Sulphat
2003-04
2004-05
Order
ing
cost
% of
orderi
ng
cost
Order
ing
cost
Perce
ntage
of
orderi
ng
cost
1845
5
18.9
1564
5
1254
0
12.9
9468
2005-06
2006-07
2007-08
Orderin
g cost
% of
order
ing
cost
Orderi
ng
cost
% of
order
ing
cost
Ord
erin
g
cost
21.7
2
12283
23.2
6
10542
14.7
7
973 16.68
2
13.1
5
8378
9.13
7952
11.1
569

- 70 -
% of
orderi
ng
cost
9.77
1045
5
10.7
3
1245
6
17.3
0
18756
6.51
15225
21.3
4
171 29.31
02
8462
8.68
5463
7.58
7362
9.84
5722
8.02
692 11.87
4
3120
3.20
2610
3.62
5250
6.36
3261
4.57
205
3
3.52
1246
0
12.0
8
6761
9.40
7933
12.6
7
5261
7.37
373
9
6.41
8455
8.68
7150
9.93
5132
2.67
7883
11.0
5
263
7
4.52
Steric
Acid
1216
1
12.0
5
5456
7.60
10211
3.93
8562
12
Wax
5140
5.30
2450
3.40
2156
100
3622
5.08
115
2
1.97
6152
6.31
4540
6.30
3172
3325
4.66
299
2
5.12
7199
9
100
80633
71355
100
583 100
46
Die
Basic
Lead
Sulphat
e
Calcium
Steric
Calcium
Carbona
te
(caco3)
Lead
Steric
Titanic
Dioxide
Lubrica
nts
Total
9740
0
100
631 10.83
6
INTERPRETATION
The above table clearly shows that the major role of raw materials in
ordering costs per order are caco3 decreased from 3.20 percent in 2003-04
to 3.62 percent in 2004-05 & 6.51 percent in 2005-06 to 4.57 percent in
2006-07 and later decreased to 3.52 percent in 2007-08.

- 71 -
Wax and Lubricants ordering cost per order are increased from 5.30
percent, 3.40 percent, 2.67 percent, 3.93 percent in 2003-04 to 2004-05 &
2005-06 to 5.08 percent, 4.66 percent in 2006-07 and later weight
chemicals, ordering cost decreased to 1.97 percent in 2007-08 and
Lubricants ordering cost increased to 5.12 percent in 2007-08.shows the
results Graph 5.11.
Graph 5.11
ORDERING COST PER ORDER FOR THE PERIOD 2005-08 IN
PERCENTAGES
Table 5.15 gives the details of carrying cost for the year 2003-08
Table 5.15
CARRYING COST FOR THE PERIOD 2003-08
- 72 -
Particular
s
Salaries
Printing
and
stationary
Insurance
Telephone
bills
Mislanious
Total
ta
2003-04
2004-05
2005-06
2006-07
2007-08
6042430
2562455
9098308
13497858
14047769
3845262
4262450
477284
382258
547765
524568
6245250
2572484
9529675
3798589
2462450
4456280
3717710
2845136
2976286
3145620
3845640
340425
356184
382196
16020330
21372075
16206211
26111111
19752605
Table 5.16 gives the details of carrying cost for the year 2003-08 in
percentages.
Table 5.16
CARRYING COST FOR THE PERIOD 2003-08 IN PERCENTAGES

- 73 -

Particula
rs
Items
Salaries
Printing
and
stationa
ry
Insuranc
e
Telepho
ne bills
Mislanio
us
Total
200304
Carr
ying
cost
In
Rs
lacs
60.4
2
38.4
5
5.24
24.6
2
31.4
5
160.
2
2004-05
2005-06
2006-07
%of
carr
ying
cost
Carrying
cost
In Rs
lacs
%of
carrying
cost
Carryi
ng
cost
In Rs
lacs
%of
carrying
cost
Carr
ying
cost
In Rs
lacs
79.2
5
2.30
25.62
80.05
90.98
88.65
42.62
4.20
4.77
1.44
12.2
5
5.62
62.45
9.23
25.72
0.22
44.56
6.24
37.17
9.61
0.09
38.45
6.24
3.40
0.08
100
213.7
100
162.4
0
100
2007-08
%of
carr
ying
cost
Carryi
ng
cost
In Rs
lacs
%of
carry
ing
cost
13.4
9
3.82
89.11
14.04
88.84
1.42
5.47
1.51
95.2
9
28.4
5
3.56
0.16
37.98
0.17
9.21
29.76
9.38
3.82
0.1
144.
61
100
0.1
100
91.07
INTERPRETATION
The above table shows that all carrying cost expenses first
decreased and later increased but salaries are increased from 79.25
percentage in 2003-04, 80.05 percentage in 2004-05, 88.65 percentage in
2005-06 to 89.11 percent in 2006-07 and later decreased to 88.84 percent
in 2007-08.Graph 12.0 shows the results.
Graph 5.12
Carrying cost for the period 2006-07 in
percentages

- 74 -
Table 5.17 gives the details of carrying per cost for the year 2003-08
Table 5.17
CARRYING COST PER ORDER FOR THE PERIOD 2003-08
(Amount in Rs.)
Raw
2003-04
2004-05
2005-06
2006-07
2007-08
materials
Poly VInal
6.32
5.40
6.2
5.98
6.1
Chloride
Tri Basic
Sulphate
1.4
2.4
2.4
2.33
2.16
Die Basic
Lead
Sulphate
Calcium
Steric
3.45
2.52
3.26
3.1
3.26
1.02
2.50
1.26
1.16
1.05
Calcium
Carbonate
(caco3)
3.50
6.20
2.98
2.96
Lead Steric
2.89
1.60
1.85
1.66
1.63
Titanic
Dioxide
Steric Acid
1.62
1.82
1.78
1.52
1.48
3.24
6.59
6.54
5.26
7.01
0.4
2.58
0.6
3.24
0.9
1.23
0.5
2.01
0.3
1.5
Wax
Lubricants
TABLE 5.18 gives the details of carrying per cost for the year 2003-08
in percentages.
Table 5.18
CARRYING COST PER ORDER FOR THE PERIOD 2003-08
(Amount in Rs.)
- 75 -
Partic
ulars
2003-04
2004-05
2005-06
2006-07
2007-08
Raw
materia
ls
carry
ing
cost
Perce
ntage
of
orderi
ng
cost
Carryi
ng
cost
Percen
tage of
orderin
g cost
carryi
ng
cost
Percen
tage of
orderin
g cost
carryi
ng
cost
Percen
tage of
orderin
g cost
carr
ying
cost
Percent
age of
orderin
g cost
Poly
VInal
Chloride
Tri Basic
Sulphat
e
6.32
28.25
5.40
26.25
6.2
21.83
5.98
21.73
6.1
22.22
1.4
9.40
2.4
12.20
2.4
8.45
2.33
8.47
2.1
6
7.87
Die
Basic
Lead
Sulphat
e
Calcium
Steric
3.45
8.32
2.52
6.54
3.26
11.48
3.1
11.26
3.2
6
11.88
1.02
8.22
2.50
7.52
1.26
4.44
1.16
4.22
3.83
Calcium
Carbona
te
(caco3)
3.50
9.45
6.20
13.25
2.98
10.5
14.54
1.0
5
2.9
6
Lead
Steric
2.89
4.25
1.60
2.25
1.85
6.51
1.66
6.03
Titanic
Dioxide
1.62
8.92
1.82
6.20
1.78
6.27
1.52
5.52
Steric
Acid
3.24
3.24
6.59
8.25
6.54
23.02
5.26
19.11
Wax
0.4
2.58
0.4
2.58
0.6
3.24
9.29
8.48
0.9
1.23
3.17
4.33
0.5
2.01
1.82
7.3
100
28.4
100
27.5
2
100
ubrican
ts
Total
100
1.6
3
1.4
8
7.0
1
0.3
1.5
27.
4
INTERPRETATION
The above table clearly shows that the major role of raw materials
in ordering costs per order are tri basic sulphate increased from 9.40
percent in 2003-04 to 12.20 percent in 2004-05 & 8.45 percent in 2005-06
to 8.47 percent in 2006-07 and later increased to 7.87 percent in 200708.

- 76 -
10.78
5.94
5.39
25.54
1.09
5.46
100
Wax and Lubricants ordering cost per order are increased from7.25
percent,8.48 percent, 4.33 percent, 7.3 percent & later decreased to 5.46
in 2007-08 .Graph 13.0 shows the results.
Graph 5.13
Carrying cost per order for the period 2003-08
in percentages
Particul
ars
Raw
materi
als
Table 5.19 gives the details of EOQ for the year 2003-08.
Table 5.19
Eoq table considering orders & arrears
2003-04
2004-05
2005-06
2006-07
2007-08
Compa
ny
arrears
3
EOQ
orde
rs
4
Compa
ny
arrears
6
EOQ
orde
rs
5
Compa
ny
arrears
3
EOQ
orde
rs
3
Compa
ny
arrears
4
EOQ
orde
rs
3
Compa
ny
arrears
3
EOQ
orde
rs
3
13
13
15
Die Basic
Lead
Sulphate
Calcium
Steric
60
20
80
42
62
65
66
69
71
73
82
85
72
63
73
75
70
82
72
72
Calcium
Carbonat
e (caco3)
43
20
73
42
53
40
57
61
68
70
Poly VInal
Chloride
Tri Basic
Sulphate

- 77 -

Lead
Steric
20
10
30
15
24
12
25
16
23
20
Titanic
Dioxide
Steric
Acid
14
15
10
19
17
28
14
11
20
25
20
65
32
32
26
18
27
22
38
12
6
9
4
5
2
3
1
16
4
8
3
15
3
5
4
10
4
7
3
Wax
Lubrican
ts
Table 5.20gives the details of carrying per cost for the year 2003-08 in
percentages.
Table 5.20
Economic order quantity in percentages for the
period for 2003-08
Particul
ars
Raw
material
s
2003-04
Compa
ny
arrears
EOQ
order
s
Compa
ny
arrears
EOQ
order
s
Poly
VInal
Chloride
Tri Basic
Sulphate
1.60
14
5.20
Die Basic
Lead
Sulphate
Calcium
Steric
55
Calcium
Carbonat
e (caco3)
56
Lead
Steric
Titanic
Dioxide
Steric
Acid
Wax
Lubrica
nts
Total
2005-06
2004-05
2006-07
2007-08
1.23
Compa
ny
arrears
3
EOQ
orde
rs
1.15
Compa
ny
arrears
3
EOQ
orde
rs
1.02
Compa
ny
arrears
3
EOQ
orde
rs
0.93
16
6.32
13
4.96
13
4.42
15
4.67
18.2
3
32.5
2
25.3
2
45
12.5
2
28.3
2
31.6
2
65
24.8
1
69
23.4
7
73
22.7
4
75
28.6
3
82
27.9
0
72
22.4
3
40
15.2
7
61
20.7
5
70
21.8
1
10
4.25
11
5.25
12
4.58
16
5.44
20
6.23
15
3.24
10
2.50
17
6.49
14
4.76
20
6.23
30
4.52
15
6.25
26
9.92
27
9.18
38
11.8
4
5
5
4.20
1.23
2
3
3.29
2.50
8
3
3.05
1.14
5
4
1.7
1.36
7
3
2.18
0.94
262
100
294
100
321
100
62
255
100
50
82
237
100
INTERPRETATION

- 78 -
The major items concern are PVC EOQ order percentage decreased
from 1.60 percent in 2003-04 to 1.23 percent in 2004-05 & 1.15 percent
in 2005-06 to 1.02 percent in 2006-07 and later decreased to 0.93 percent
in 2007-08. The EOQ order percentage of Tri Basic Sulphate decreased
from5.20 percent in 2003-04 to 6.32 percent in 2004-05 & 4.96 percent
in 2005-06 to 4.42 percent in 2006-07 and later increased to 4.67 percent
in 2007-08.Graph 14.0 shows the results.
Graph 5.14
Economic order quantity for the period 2003-08 in percentages

- 79 -
FINDINGS & CONCLUSIONS

The conclusions and findings of the study are :

- 80 -
The inventory turn over ratio in the first period it is 100.88 percent in the year 200304 and later increased and again decreased in the year 2007-08 that is, 34.52 percent.
In ABC analysis the classes of pipes shows that percentage of A item sales increased
from 69.2 percent in the year 2003-04 and later in the year are also increased from
79.99percent in the year 2007-08.
In annual consumption of raw material PVC increases its value in percentage from
28.45 percent in the year 2003-04 and later decreased in the years and again increased
to 35.7 percent in 2007-08.
Transportation and Printing and Stationary has increased in its percentage constantly
in Ordering cost category that is 8.458 percent to 91.76 percent in the years 2003-08.
In ordering cost was and Lubricants are increased froma1 5.30 to 6.31 in the year
2003-04 and later in the year decreased was and lubricants percentage 1.97 to 5.12 in
the year 2007-08.
The carrying cost period shows that all cost expenses first decreased later increased
but salaries are increased from 79.25 percent in the year 2003-04 and again years
decreased the percentage to 88.65 due to some changes.
In economic order quantity of PVC decreased from 1.60 percent in the 2003-04 and
later also decreased to 0.93 percent in the year 2007-08 due to some pricefluctuations.
The basic raw materials like PVC, calcium carbonate and calcium steric demanded in
more quantities that is 70 percent of the total value when compared to other raw
materials.
The performances of the management and inventory management techniques are good
in the firm hence the null hypothesis is accepted for the study.
SUGGESTIONS
- 81 -
The following suggestions are suggested for effective inventory management in select
organization in particular and in general for all organization
The company shall reduce ordering cost per order and carrying cost per unit by
adopting proper inventory management techniques effectively.
The company should concentrate on strict implementation of inventory policies like

Economic Order Quantity to see that timely demand of different production schedules
are met with out any unnecessary lacking of bunds in stock.
The company has to maintain good climatic conditions based on their nature of
materials.
The management shall determine the route for carrying goods, which reduce the
transportation, lead time and also for fixation of transportation rate.
The company shall reduce ordering cost per order and carrying cost per unit by
adopting proper inventory management techniques effectively..
The management shall determine the route for carrying goods, which reduce the
transportation, lead time and also for fixation of transportation rate.
The company has to implement online technology and various software packages to
store and maintain inventory levels in the company.

- 82 -
BOOKS
1. James C.Vann Horne Financial Management, 9th Edition Prentice-Hall of India

Private Limited, Nee Delhi, 1994.
2. Khan M.Y & Jain P.K, Financial Management, 2nd Edition Tata McGraw-Hill
Publishing Co Ltd, New Delhi.
3. I.M.Pandy, Financial Management, 7th Edition, Vikas Publishing House Private

Limited, New Delhi, 1995.
4. S.N.Maheswari, Financial Management, 4th Edition, Sultan Chand&Sons, New

Delhi, 1997,
5. S. N.Man Mohan & Goyal, Principles of Management Accounting 6th Edition,

Sathiya Bhavan, Agra, 1998.
6. Prasanna Chandra, Financial Management, 3rd edition, Tata McGraw- Hill

Publishing Co.,Ltd., New Delhi, 1984.
WEBSITES
1. www.inflowinventory.com
2. www.inventorymanagement.com
- 83 -
3. www.effectiveinventory.com
4. www.sujalapipes.com
5. www.nandipipes.com

- 84 -

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PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Plastic Industry A Profile.

Chapter 2 Sujala Pipes Pvt Ltd.,- A Profile

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PVC: Poly Vinyl Chloride

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

programmed is completed as well as new plants by other manufactures like PIL,

Agriculture, Forestry and water management

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Global demand to grow4.6% yearly through 2012

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

ABOUT SUJALA INDUSTRIES

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Finolex in Karnataka & Maharastra.

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

4985 TESTS ON SUJALA PIPES MEASURING FOR QUALITY

In this test we have to measure pipe length with Weighting Machine

After doing this keep the pipe in cooling place.

In this we have to take 2 types of cooling measures those are

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

I. De Fridge & the

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

the designated place.

2.5Kg, 4Kg, 6Kg, 10Kg / Cm2 and 15Kg/Cm2

Manufactured with ISI mark - IS4958: 2000

20mm to 400 O.D

NANDI GROUP OF PRODUCTS

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Nandi milk dairy products

Department of Business Administration, Yogi, Vemana University, KADAPA-516003

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

TBLS (Tri Basic lead Sulphate)

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,

Transportation of SUHALA PIPES is very admirable. This unique strength of

PROJECT ON INVENTORY MANAGEMENT IN SUJALA PIPES PVT. LTD.,