Naved 2 Yr PRJCT

A STUDY ON INVENTORY CONTROL TECHNIQUES
WITH REFERENCE TO ALLOYSYS EXTRUSION

Submitted in partial fulfillment of the requirements for the award of
Master of Business Administration

by
NAVED AHMED. A
Register No: 37410150
SCHOOL OF MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(Deemed to be University)
Accredited with Grade “A” by NAAC
JEPPIAAR NAGAR, RAJIV GANDHI SALAI,
CHENNAI – 600119. TAMILNADU.
JULY 2019
SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC
(Established under Section 3 of the UGC Act, 1956)
Jeppiaar Nagar, Rajiv Gandhi Salai,
Chennai – 600 119.
SCHOOL OF MANAGEMENT STUDIES
BONAFIDE CERTIFICATE
This is to certify that this Freelance project Report is the bonafide work of
NAVED AHMED A (37410150) who carried out the internship training report
entitled “INVENTORY CONTROL TECHNIQUES WITH REFERENCE TO
ALLOYSYS EXTRUSION,” under our supervision from May 2018 to June
2018.
Dr. UMAMAHESWARI, MBA, M Phil, Ph.D

Internal Guide
Dr. BHUVANESWARI G., MBA., Ph.D.

Dean – School of Management Studies
Submitted for Viva voce Examination held on_____________________
Internal Examiner External

Examiner
DECLARATION
I NAVED AHMED. A (37410150) hereby declare that the Project Report entitled
“INVENTORY CONTROL TECHNIQUES” done by me under the guidance of
DR.UMAMAHESWARI G., MBA., M.PHIL. PH.D., is submitted in partial fulfillment of
the requirements for the award of Master of Business Administration degree .
ACKNOWLEDGEMENT
I am pleased to acknowledge my sincere thanks to Board of Management

of SATHYABAMA for their kind encouragement in doing this project and
for completing it successfully. I am grateful to them.
I convey my thanks to DR.BHUVANESHWARI G., MBA.,PH.D Dean,

school of Management Studies for providing me necessary support and
details at the right time during the progressive reviews.
I would l like to express my science and deep sense of gratitude to my

project guide DR.UMAMAHESWARI S., MBA., M.phil., Ph.D for his/her
valuable guidance, suggestions and constant encouragement paved way
for the successful completion of my project work.
I wish to express my thanks to all Teaching and Non-teaching staffs

members of the school of management studies who were helpful in many
ways for the completion of the project.
TABLE OF CONTENTS
CHAPTER NO. CONTENTS PAGE NO.
ABSRACT I
LIST OF TABLES ii
LIST OF CHARTS iii
1 INTRODUCTION
1.1 Introduction about the study
1.2 Industry profile
1.3 Company profile
2 REVIEW OF LITERATURE
2.1 Review of Literature
3 RESEARCH METHODOLOGY
3.1Need for study
3.2 Scope of the study
3.3 Objectives of the study
3.4 Research of Design
3.5 Sources of Data
3.6
ABSTRACT LIST OF TABLE
TABLE NO. PARTICULARS PAGE NO.

LIST OF CHARTS
CHART NO. PARTICULARS PAGE NO.

ABSTRACT
Stock administration is the "stream's administration of materials into an association to

the degree where, those materials are changed over into the association's deciding
item. This study goes for distinguishing the stock's productivity, administration at
Alloysys Extrusion. The auxiliary targets incorporate comprehension the perceptual
experience of representatives towards the stock administration and the components
making the abundance stock inside of the establishment.
Successful inventory management involves creating a purchasing plan that will ensure
that items are available when they are needed (but that neither too much nor too little is
purchased) and keeping track of existing inventory and its use.
The main objectives of study are to study the inventory management process in the
company. The other objectives are to learn how the company keeps all the data of
inventory perfectly, to find out the composition of inventory, to study the various
inventory ratio and to analyze the inventory management techniques used in the
company.
Inventory management being a very important concept in all the company’s having a
void coverage often calls for the managerial attention. In the modern times inventory
management has become the integral part of the all companies. So all the firm gives
special importance for inventory management. The major objective of the study is to
examine the effectiveness of inventory management system adopted by Alloysys
Extrusion; the study mainly focuses on the techniques used by the company to control
the inventory. The study also covers other areas like the financial ratios for the period of
2014 to 2018.
CHAPTER 1
INTRODUCTION
1.1 Introduction about the study
The term ‘inventory’ originates from the French word ‘Inventaire’ and Latin word
‘Inventariom”, which implies a list of things found.
The term ‘inventory’ can be defined as,
“The term inventory includes materials like – raw, in process, finished packaging,
spares and others; stocked in order to meet an unexpected demand or distribution in
the future.”
Inventory includes the following categories of items:
a. Production Inventories:
Raw materials, parts and components which enter the firm’s product in the
production process. These may consist of two types – special items manufactured to
company specifications and standard industrial items purchased ‘off the shell’.
b. In-process Inventories:
Semi-finished products found at various stages in the production operation.
c. Finished goods Inventories:
Completed products ready for shipment.
Process of Inventory Management and Control
Inventory management and control refers to the anning for optimum quantities of
materials at all stages in The production cycle and evolving techniques which would
Ensure the availability of planned inventories. Following our steps are involved in the
process:
a. Determination of optimum inventory levels and procedures of their review and

adjustment:
It is a significant step but a difficult one. Too much inventory results in locking up
of working capital accompanied by increased carrying costs (but reduced ordering
costs). Excess inventories, however, guarantee uninterrupted supply of materials and
components, to meet production schedules and finished goods to meet customers
demand. Too less of inventory releases working capital for alternative uses and reduces
carrying costs and increases ordering costs. But there is the risk of stock out costs.
b. Determination of the degree of control that is required for the best results:
The second aspect of inventory management is to decide just how much control
is needed to realize the objectives of inventory management. The difficulty is best
overcome by categorization of inventory on the basis of value. Popularly called the ABC
categorization, this approach is useful in deciding the degree of control. ‘A’ class items
are ‘high’ in value but ‘low’ in quantity, ‘C’ class inventories are the opposite of ‘A’ group
i.e. ‘high’ in quantity and ‘low’ in value. In between are the ‘B’ group stocks which are
more or less equal in quantity and value proportion to the total inventory. Tight control is
exercised on ‘A’ category items through accurate records of receipts and issues and by
co-ordination of incoming shipments with production managements.
c. Planning and design of the Inventory control system:
An inventory system provides the organizational structure and the operating

policies for maintaining and controlling goods to be inventoried. The system is
responsible for ordering and receipt of goods, timing the order placement, and keeping
track of what has been ordered, how much, and from whom.
d. Planning of the Inventory control organization:
It is yet another important aspect of inventory management because choosing

the panel to control is very difficult.
INVENTORY CONTROL TECHNIQUES
Inventory control techniques are employed by the inventory control organization

within the framework of one of the basic inventory models, viz., fixed order quantity
system or fixed order period system. Inventory control techniques represent the
operational aspect of inventory management and help realize the objectives of inventory
management and control.
Several techniques of inventory control are in use and it depends on the

convenience of the firm to adopt any of the techniques. What should be stressed,
however, is the need to cover all items of inventory and all stages, i.e. from the stage of
receipt from suppliers to the stage of their use. The techniques most commonly used
are the following:
ABC Analysis:
ABC analysis is a business term used to define an inventory categorization

technique often used in materials management. It is also known as ‘Selective Inventory
Control.
ABC analysis provides a mechanism for identifying items which will have a
significant impact on overall inventory cost whilst also providing a mechanism for
identifying different categories of stock that will require different management and
controls. When carrying out an ABC analysis, inventory items are valued (item cost
multiplied by quantity issued/consumed in period) with the results then ranked. The
results are then grouped typically into three bands. These bands are called ABC codes.
ABC CODES:
"A class" inventory will typically contain items that account for 80% of total
value, or 20% of total items.
"B class" inventory will have around 15% of total value, or 30% of total items.
"C class" inventory will account for the remaining 5%, or 50% of total items.
ABC Analysis is similar to the Pareto principle in that the "A class" group will
typically account for a large proportion of the overall value but a small percentage of
the overall volume of inventory.
Advantages of ABC Analysis:
1. Helps to exercise selective control over such items, which are having a sizable
investment.
2. Helps to point out obsolete stocks easily.
3. Provides sound basis for allocation of funds and human resources.
4. It enables the maintenance of high inventory turnover rate.
Disadvantages of ABC Analysis:
1. Considers only money value of items and neglects the importance of items for the
production process or assembly or functioning.
2. It done not categorize the items based on their critical needs hence sometimes the
purpose of ABC categorization may be defected.
USAGE OF ABC ANALYSIS:
1. In day to day warehouse operations, materials are some time under issued, over
issued, issued and not accounted into the system, misplaced, stolen etc. This results
into inaccuracy in the inventory. Cycle counting is the process to count and reconcile
the materials. Ideally, every material in the warehouse should be counted during a fixed
interval (every year) for maintaining 100% accuracy, but counting & reconciling every
material is not cost effective and very expensive. To count the accuracy of the inventory
in a cost effective manner, it is recommended to count the materials based on inventory
classification. If A class materials are counted within a fixed interval (could be six
months or a year) then the firm needs to count only 5% to 10% of the total materials and
it will cover 60% to 80% of the inventory value. It means that firm only counts 5 % to
10% of the materials and remove the inaccuracy from the inventory value from
60%to80%.Similarly B class materials can also be counted on a less frequency ( from
once in 18 months to 24 Months) as the number of materials become higher and C
class materials at even lesser frequency (once in 27 months to 36 months) as number
of material becomes more (60% to 85% of the total materials).
2. An inventory controller shall be concentrating more on the A class items for reducing
the inventory as he/she shall be concentrating only 5% to 10% of the total items and
shall be getting the opportunity to reduce inventory on 60% to 80% of the value.
3. Any reduction in lead time of A class items shall result in reduction in inventory, so
procurement manager will work out with suppliers to reduce the lead time.
4. On issue of materials, tight control on A class, Moderate control on B class, Loose

Control on C class. So ‘A’ class items may be issued after getting the approvals from
Senior Executives of the company. B may be moderately controlled. Very little control
can be exercised while issuing C class item
High, Medium and Low 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.
The HML analysis is useful for keeping control over consumption at departmental
levels, for deciding the frequency of physical verification, and for controlling purchases.
Procurement department is more concerned with prices of materials so this

analysis helps them to take them the decisions such as, who will procure what based on
the hierarchy and price of material.
Some of the other objective can be as under
Helps in taking the decision such as whether to procure in exact requirement or

opt for EOQ or purchase only when needed
When it is desired to evolve purchasing policies then also HML analysis is

carried out i.e. whether to purchase in exact quantities as required or to purchase in
EOQ or purchase only when absolutely necessary
When the objective is to keep control overconsumption at the department level

then authorization to draw materials from the stores will be given to senior staff for H
item, next lower level in seniority for M class item and junior level staff for L class items.
Cycle counting can also be planned based on HML analysis. H class items shall
be counted very frequently, M class shall be counted at lesser frequency and L class
shall be counted at least frequency as compared to H & M class.
ECONOMIC ORDER QUANTITY(EOQ):
Economic order quantity (EOQ) is the order quantity that minimizes the
total holding costs and ordering costs. It is one of the oldest classical production
scheduling models. The model was developed by Ford W. Harris in 1913, but R. H.
Wilson, a consultant who applied it extensively, and K. Andler are given credit for
their in-depth analysis.
FORMULA
EOQ= √𝟐 × 𝐃 × 𝐁 ÷ 𝐢 × 𝐜
Components of the EOQ Formula:
D: Annual Quantity Demanded
Q: Volume per Order
S: Ordering Cost (Fixed Cost)
C: Unit Cost (Variable Cost)
H: Holding Cost (Variable Cost)
i : Carrying Cost (Interest Rate)
THE INPUTS
While the calculation itself is fairly simple the task of determining the correct data
inputs to accurately represent your inventory and operation is a bit of a project.
Exaggerated order costs and carrying costs are common mistakes made in EOQ
calculations. Using all costs associated with your purchasing and receiving departments
to calculate order cost or using all costs associated with storage and material handling
to calculate carrying cost will give firm highly inflated costs resulting in inaccurate results
from its EOQ calculation. Often these references trace back to studies performed by
advocacy agencies working for business that directly benefit from these exaggerated
(my opinion) costs used in ROI calculations for their products or services.
It is relevant to keep in mind that even though accuracy is crucial, small

variances in the data inputs generally have very little effect on the outputs. The
following breaks down the data inputs in more detail and gives insight into the aspects
of each.
ANNUAL USAGE
Expressed in units, this is generally the easiest part of the equation. Firm can
simply use its forecasted annual usage data for computational purposes.
The cost of holding inventories are as follows:
(a)Material Cost:
This include the cost of purchasing the goods, transportation and

handling charges less any discount allowed by the supplier of goods.
(b)Ordering Cost:
This includes the variables cost associated with placing an order for
the goods. The fewer the orders, the lower will be the ordering costs for the firm.
(c)Carrying Cost::
This includes the expenses for storing and handling the goods. It comprises
storage costs, insurance costs, spoilage costs, cost of funds tied up in inventories etc.
TYPES OF INVENTORY
1. Movement Inventories
Movement inventories are also called transit or pipeline inventories.

Their existence owes to the fact that transportation time is involved in transferring
substantial amount of resources.
2. Buffer inventories
In Buffer inventories are held to protect against the uncertainties of demand

and supply. An organization generally knows the average demand for various items that
it needs.
3. Anticipation Inventories
Anticipation inventories are held for the reason that future demand for the
product is anticipated. Production of specialized times like crackers well before dewily,
umbrellas and raincoats before taints set in, fans while summers are
approaching; or the piling up of inventory stocks when a strike is on the anvil,
are all examples of anticipation inventories.
IMPORTANCE OF INVENTORY CONTROL:
The importance or necessity control is well explained in the terms of the objects
of inventory control, which are obtained through it. A proper inventory control lowers
down the cost of production and improves profitability of enterprise.
ADVANTAGES OF INVENTORY CONTROL:
1. Reduction in investment in inventory

2. Proper and efficient use of raw materials.
3. No bottleneck in production.
4. Improvement in production and sales.
5. Ordering cost can be reduced.
6. Efficient and optimum use of physical as well as financial resources.
1.2 Industry profile
Companies constituting the majority of the country's production. With the growing
Aluminium Industry in India is a highly concentrated industry with the top 5 demand of
aluminium in India, the Indian aluminium industry is also growing at an enviable pace. In
fact, the production of aluminium in India is currently outpacing the demand.
The production of aluminium started in India in 1938 when the Aluminum Corporation of
India's plant was commissioned. The plant which was set up with a financial and
technical collaboration with Alcan, Canada had a capacity of producing 2,500 ton per
annum. Hindustan Aluminum Corporation (Hindalco) was set up in UP in the year 1959;
it had a capacity of producing 20,000 ton per annum. In 1965, a public sector enterprise
Malco which had a capacity of 10,000 ton per annum was commissioned; by 1987,
National Aluminium Company (NALCO) was commissioned to produce aluminium.
Ithadacapacityofproducing0.218millionton.
During the 1970s, the government started regulating and controlling the Indian
aluminium industry. Restrictions in entry and price distribution controls were quite
common in the Indian aluminium sector. Aluminium Control Order was implemented
where the aluminium producers had to sell 50% of their products for electrical usages.
However, in 1989, the order was removed as the government decontrolling was
revoked. With de-licensing of industry in 1991, the liberal import of technologies and
capital goods was started. The liberalization resulted in a growth rate of 12% of the
industry, comparing to the growth rate of 6% during the 1980.
Aluminium production in india ls worlds fifth largest aluminium producer
India is world's fifth largest aluminium producer with an aluminium production

competence of around 2.7 million tones, accounting almost 5% of the total aluminium
production in the world. India is also a huge reservoir of bauxite with a bauxite reserve
of three billion the production India lies at the eighth position in the list of leading
primary aluminium producers in the world. India saw a significant growth in aluminium
production in the past five years. In 2006-07, the production target of aluminium in India
laid by the Ministry of Mines, Government of India was 1,153 KT, which was augmented
to 1,237 KT in the next year (2007-08). Due to the growing demand from the
construction, electrical, automobiles and packaging industry, the production of
aluminium also hiked up. In FY 09, the total aluminium production in india was around
1.35tonnes.Theconsumption
After a stagnant consumption of primary aluminium in India from the end of 1990s to
2002 (when the consumptions were between 500 – 600 KT), it started rising sharply
since 2002. The consumption reached at 1,080 KT in 2006. The consumption of
aluminium in India is dominated by the industries like power infrastructure and
transportation etc. the major players power, The Indian aluminium industry is
dominated by four or five companies that constitute the majority of India's aluminium
production. Following are the major players in the Indian aluminium industry:
 Hindustan Aluminium Company (HINDALCO)
 National Aluminium Company (NALCO)
 Bharat Aluminium Company (BALCO)
 MALCO
 INDAL
HINDALCO:
Hindalco is the biggest player in the aluminium industry in India with around 39%
of market share. An Aditya Birla Group flagship company, Hindalco has its aluminium
plant at Renukoot in Uttar Pradesh. It has various aluminium products with a market
share of 42% in primary aluminium, 20% in extrusions 63% in rolled products, 31% in
wheels
Sterlite Industries:
The aluminium business of Sterlite Industries Limited comprises of two Indian
aluminium giants – BALCO and MALCO. While BALCO is a partially integrated, MALCO
is a fully integrated producer of aluminium. Sterlite has got a market share of around
32%
NALCO:
It is also one of the leading aluminium producers in India. Government of India
has a stake of 87.15% in this company. Its aluminium refinery is located at Damanjodi. It
also has a smelter located at Angul, Orissa. Currently, NALCO is concentrating on a
capex programme to increase its production from 345,000 tonnes to 460,000 tonnes.
1.3 Company profile
Alloysys Extrusion [P] Ltd came into existence in 2005. The journey from manufacturing
aluminium extrusion to becoming one of the best makers of Quality Aluminium
Extrusions have been filled with accomplishments and accolades. Alloysys Extrusion
aims to have a global presence as a leading global manufacturer of high quality
Aluminium extruded products. The endeavors of the organization are focused towards
achieving all-round excellence. The organization seeks to accomplish a fusion of
traditional methods and innovative concepts to supply the best quality extruded product.
Alloysys Extrusion manufactures wide variety Aluminium extrusions like extruded
channel, extruded section or extruded profile that meet diversified usage.
Alloysys Extrusion has been maintaining its utmost standards of precision and quality
and founded on the philosophy of ensuring uncompromising satisfaction to our
customers. We have excellent time delivery of all the versatile extrusion products and
these products are adding a new dimension to the modern building construction
technology and to our business. Alloysys Extrusion [P] Ltd as the acknowledged market
leaders have set up benchmarks for quality, timely delivery and client satisfaction. We
have a unique combination of being flexible and an ability to react very quickly to
changes in designs and specifications. This has ensured that our products and services
to all our customers have been acclaimed internationally. From the beginning, we have
always had a strong foundation of adaptability and experience. Always working very
closely with customers, we have developed our products and services in tune with the
market developments and requirements.
Meeting with customer's need and satisfaction is the true achievement
Alloysys Extrusion believes and follows this only statement at the time of manufacturing
the products. This idea has helped Alloysys Extrusion to set a clear picture towards
company's goal. Alloysys Extrusion is all set to have a wide range of all kind extrusions
in near future. Alloysys Extrusion have well known in eastern part of the country.
WHAT WE CAN OFFER YOU
ALLOYSYS EXTRUSION currently has automatic hydraulic presses with a production

capacity of 3,000 MT per annum. The company offers the standard aluminium
extrusions profiling and also is able to take care of specific designs and requirements.
OUR CAPABILITIES
 Automated Hydraulic Extrusion Presses
 Capacity: 3000 MT per annum
 Die Library: 1000
 profiles ranging from 10mm - 150 mm CCD
 Section weight up to 17 kg per piece
 Wall thicknesses minimum 0 .5mm - 20 mm
 Cut lengths up to 6-7m
 Standard alloy ranges
MISSION:
To become the most preferred aluminium extrusion company, focusing on
manufacturing the high quality extruded products with excellent service consistently.
VISION:
We shall be producing high quality aluminium extrusions with our organizational

expansion so that we shall always be able to meet the expectations of our all business
associated people and specially our consumers.
PRODUCTS
1. Architectural
A) ALUMINIUM EXTRUDED DOOR PARTITION SERIES

 All
 Partitions
 Middle Section
 Top Bottom
Single Partition
Double Partition
Door Top
Door Middle Single
Door Middle Double
Door Bottom
Door Vertical
Glazing Clip
B) ALUMINIUM EXTRUDED CURTAIN WALL SERIES
Curtain Wall Section 1423

C) ALUMINIUM EXTRUDED HOLLOW SECTION SERIES
Rectangular Tube
Square Tube
D) ALUMINIUM EXTRUDED OPENABLE WINDOW SERIES
 All
 34 Series
 40 Series
 Cleat Angle

34 Series Outer Frame

34 Series Shutter Frame

34 Series Mullian

34 Series Clip

40 Series Outer Frame

40 Series Shutter Frame

40 Series Mullian

40 Series Clip

Cleat Angle
E) ALUMINIUM EXTRUDED TEE SERIES

Bulb Tee
2. Industrial
A) ALUMINUM EXTRUDED ANGLE SECTION SERIES

Equal Angle

Unequal Angle
B) ALUMINUM EXTRUDED LADDER SECTION SERIES

Fluted Tube

C Section

Stapazing

Hinge
C) ALUMINUM EXTRUDED WATER CHANNEL SECTIONS

Water Channel Section 7506

Water Channel Section 7511
D) ALUMINUM EXTRUDED ROUND TUBE

Round Tube
E) ALUMINUM EXTRUDED L SECTIONS

L Section
F) ALUMINUM EXTRUDED DOUBLE ROLLER SECTIONS

Double Roller Section
CUSTOM EXTRUSION
1. INDUSTRY SPECIALIZATION
Aluminium extrusion technology in modern industries continues to be a subject of

discussion and evaluation concerning its application to the working environment. The
demand for and application of aluminium extrusion in architecture and in the
manufacture of auto mobiles, small machine components, structural component and
especially aircraft, have increased tremendously, and competition in this industry is
intense. The extrusion industry is now more than 100 old.
Industrial Uses: Aluminium is used extensively in almost countless application because

of its high strength combined with low density. Also it is corrosion resistant to the
atmosphere as a thin film of aluminium oxide forms over aluminium surfaces which
protect it from further corrosion. Also, aluminium is non-toxic making it suitable for
application involving contact with food products.
The most extensive and biggest use of aluminium is in packing. It used for packing in
various forms such as cans, foils, tubes, and bottle tops. Second biggest use of
extruded aluminium is in transportation. Aluminium extruded sections are widely used in
most transport vehicles. It is particularly suited for aeroplanes. A modern aeroplane
contains about 80% aluminium by weight; A Boeing 747 contains about 75 tons of
aluminium.
Electrical transmission is another very big application area for aluminium. It has about
63% of electrical conductivity of copper but only half the density. That makes it a very
attractive substitute for copper in electric cables and transmission lines. Particular for
bare conductors of transmission lines, aluminium is the only choice.
Aluminium finds very big application in construction industry as forming Architectural

channels or sections of window and door frames, cladding, and roofing. Aluminium is
also used for painting other surfaces. Aluminium is also used extensively for making
stylish and light weight furniture. It is particularly popular for folding and other type of
furniture which is intended to be shifted and stored away frequently.
2. THE EXTRUSION PROCESS
Extrusion is a plastic deformation process in which a block of metal (billet) is forced to

flow by comparison through the die opening of a smaller cross - sectional area than that
of the original billet. Extrusion is an indirect - compression process. Indirect -
compressive forces are developed by the reaction of the work piece (billet) with the
container and die results in high values. The reaction of the billet with the container and
die results in high compressive stresses that many breakdowns from the billet.
Extrusion is the best method because the billet is subjected to compressive forces only.
Extrusion can be cold or hot, depending on the alloy and the method used. In hot
extrusion, the billet is preheated to facilitate plastic deformation. Conventional Direct
Extrusion: The most important and common method used on aluminium extrusion is the
direct process. In this process, the principle of direct extrusion, the billet is placed in the
container and pushed through the die by the ram pressure. Direct extrusion finds
application in the manufacture of aluminium solid rods,aluminium bars, hollow tubes,
and hollow and solid sections according to the design and shape of the die. In the same
direction as ram travel. During this process, the billet slides relative to the walls of the
container. The resulting frictional force increases the ram pressure considerably. During
the direct extrusion, the load or pressure - displacement curve most commonly.
Traditionally, the process has been described as having three distinct regions:
 The billet is upset, and pressure rises rapidly to its peak value.
 The pressure decreases, and what is termed "steady state" extrusion proceeds.
3. EXTRUSION IDEA TO OBJECT
"Meeting with customer's need and satisfaction is the true achievement", we also
believe and follow this only statement at the time of manufacturing our extruded
products
The process initiates with the necessity or demand of an Extruded profile. Once the
necessity arrives, it demands specific die for that extrusion product which results in the
making of specific die for the product After getting the die, finally the production phase
of that particular extruded product takes place in plant under the process.
QUALITY MANAGEMENT
1. QUALITY CONTROL AND COMPLIANCES
At Alloysys Extrusion, we do not compromise on quality, we walk an extra mile to

sustain the quality. What we have done is that we have standardized the process of
quality compliance checks. The quality compliance tests are not carried out randomly
but it is a well defined process carried out continuously at every stage of production. An
error does not become a mistake until you refuse to correct it. With this principle the
Alloysys Extrusion has in place a complete traceability system to trace down the root
cause of deviation, should they happen to occur. We are fully geared with the requisite
technical expertise and quality control mechanism, which leads us to successfully meet
even the bulk orders of the clients. Additionally, our streamlined administration, regular
follow-ups with the clients and quick order dispatch has enabled us to win the faith and
trust of the customers.
Alloysys extrusions is awarded ISO 9001:2008 Certification by international
agency norsk akkreditering of norway for its quality management standards.
2. TECHNICAL SPECIFICATIONAluminium is a soft, durable, lightweight, ductile and

malleable metal with appearance ranging from silvery to dull gray, depending on the
surface roughness. Aluminium is nonmagnetic and does not easily ignite. A fresh film of
aluminium film serves as a good reflector (approximately 92%) of visible light and an
excellent reflector (as much as 98%) of medium and far infrared radiation. The yield
strength of pure aluminium is 7-11 MPa, while aluminium alloys have yield strengths
ranging from 200 MPa to 600 MPa. Aluminium has about one-third the density and
stiffness of steel. It is easily machined, cast, drawn and extruded. Corrosion resistance
can be excellent due to a thin surface layer of aluminium oxide that forms when the
metal is exposed to air, effectively preventing further oxidation. The strongest aluminium
alloys are less corrosion resistant due to galvanic reactions with alloyed copper. This
corrosion resistance is also often greatly reduced when many aqueous salts are
present, particularly in the presence of dissimilar metals. Aluminium is one of the few
metals that retain full silvery reflectance in finely powdered form, making it an important
component of silver-colored paints.
WHAT OUR PRODUCTS OFFER WITH RESPECT TO THE TECHNICAL

SPECIFICATION
 Corrosion-Resistant
 High Strength-to-Weight Ratio
 Ease of Fabrication
 Ease of Fastening and Assembly
 Versatility in Joining
 Durable, Resilient and Strong etc.
3. USES
Aluminium is almost always alloyed, which markedly improves its mechanical

properties, especially when tempered. For example, the common aluminium foils and
beverage cans are alloys of 92% to 99% aluminium. The main alloying agents are
copper, zinc, magnesium, manganese, and silicon (e.g., duralumin) and the levels of
these other metals are in the range of a few percent by weight. With completely new
metal products, the design choices are often governed by the choice of manufacturing
technology. Extrusions are particularly important in this regard, owing to the ease with
which aluminium alloys, particularly the Al-Mg-Si series, can be extruded to form
complex extruded profiles.
CHAPTER 2
REVIEW OF LITERATURE
2.1 Review of Literature
A routine of subjects has been performed in the territory of stock rundown

administration by a few analysts. Some of these are abridged underneath:
Achievement of any modern undertaking relies on the 6 M's
1. Money 2. Manpower 3. Machine 4. Material 5. Market 6. Management
Materials are significant significance at the very least some other M‟s.
Issues have their root in
Material influences the productivity of all men, machine, cash & promoting
choices of the organizations and accordingly get the genuine worry of
administration at all floors. In the event that there were in like manner quite
a bit of material issues like perfect trusts lined up in unnecessary stock
stockpiling and obsolesces challenges business sector weight would rise.
Henceforth the significance of stock rundown administration has been
perceived.
A routine of subjects has been performed in the region of stock rundown

administration by a few scientists. Some of them are given beneath;
Bern at de William year 2008

This overview says that the primary center of stock administration is on
transportation and warehousing. The choice received by administration relies on upon
the conventional strategy for stock control illustrations. The conventional technique for
stock administration is how much helpful in nowadays the creator tell about it. He is
likewise expressing that the conventional technique is not an expense diminishing, it is
so much costly. In any case, the dealing with the stock is more critical work for any
assembling unit.
Pradeep singh 2008
In his study made an attempt to examine the inventory and working capital
management of Indian Farmers Fertilizer Cooperative Limited (IFFCO) and National
Fertilizer Limited (NFL). He concluded that the overall position of the working capital of
IFFCO and NFL is satisfactory. But there is a need for improvement in inventory in case
of IFFCO. However inventory was not properly utilized and maintained bay IFFCO
during study period. The management of NFL must try to properly utilize the inventory
and try to maintain the inventory as per the requirements. So that liquidity will not
interrupt.
Dave Piasecki 2001
He focused on inventory model for calculating the optimal order quantity that used the
Economic Order Quantity method. He points out that many companies are not using
EOQ model because of poor results resulted from inaccurate data input. He says that
EOQ is an accounting formula that determines the point at which the combination of
order costs and inventory costs are the least. He highlights that EOQ method would not
conflict with the JIT approach. He further elaborates the EOQ formula that includes the
parameters such as annual usage in unit, order cost and carrying cost. Finally, he
proposes several steps to follow in implementing the EOQ model. The limitation of this
literature is that it does not elaborate further relationship between EOQ and JIT. It does
not associate the inventory turns with the EOQ formula and fails to mention the profit
gain with the quantity is calculated.
Gaur, Fisher and Raman 2005
In their study examined firm-level inventory behaviour among retailing companies. They
took a sample of 311 public-listed retail firms for the years 1987–2000 to examine the
relationship of inventory turnover with gross margin, capital intensity and sales surprise.
They observed that inventory turnover for retailing firms was positively related to capital
intensity and sales surprise while inversely associated with gross margins. They also
suggested models that yield an alternative metric of inventory productivity, adjusted
inventory turnover that can be used in study of performance analysis and managerial
decision-making.
S. Singh 2006
Analysed the inventory control practices of single fertilizer company named IFFCO. He
statistically examined the inventory system with consumption, sales and other variables
along with growth of these variables and inventory patterns. He concluded that an
increase in components of inventory lead to an increase in the proportion of inventory in
current assets. A special focus was made on stores and spares in order to calculate
excess purchases resulting in loss of profit.
Capkun, Hameri and Weiss 2009
Statistically analysed the relationship between inventory performance and financial
performance in manufacturing companies using the financial information of a large
sample of US-based manufacturing firms over a 26-year period, that is, 1980 to 2005.
They inferred that a significant relationship existed between inventory performance
along with the performance of its components and profitability. Raw material inventory
performance was highly correlated to gross profit and operating profit. Work in progress
inventory was highly correlated to gross profit measures while finished goods inventory
performance was more correlated with operating profit measures.
Gaur and Bhattacharya 2011
Attempted to study the linkage between the performance of the components of
inventory such as raw material, work in progress and finished goods and financial
performance of Indian manufacturing firms. The study revealed that finished goods
inventory as inversely associated with business performance while raw material
inventory and work in progress did not have much effect on same. They emphasised
that instead of focusing on total inventory, an attempt should be made to concentrate on
individual components of inventory so as to adequately manage the same. They
concluded that managers not paying heed to inventory performance may become weak
in combating competitors.
Eneje et al 2012
Investigated the effects of raw materials inventory management on the profitability of
brewery firms in Nigeria using a cross sectional data from 1989 to 2008 which was
gathered for the analysis from the annual reports of the sampled brewery firms.
Measures of profitability were examined and related to proxies for raw materials
inventory management by brewers. The Ordinary Least Squares (OLS) stated in the
form of a multiple regression model was applied in the analysis. The study revealed that
the local variable raw materials inventory management designed to capture the effect of
efficient management of raw material inventory by a company on its profitability is
significantly strong and positive and influences the profitability of the brewery firms in
Nigeria. They concluded that efficient management of raw material inventory is a major
factor to be contained with by Nigerian brewers in enhancing or boosting their
profitability.
Soni 2012
Made an in depth study of practices followed in regard to inventory management in the
engineering goods industry in India. The analysis used a sample of 11 companies for a
period five years, that is, 2004–2009 and was done using panel data set. The adequate
and timely flow of inventory determines the success of an industry. She concluded that
size of inventory enhanced marginally over the period as compared to a hike in current
assets and net working capital. Inventories constituted half of the working capital which
was due to overstocking of inventory as a result of low inventory turnover especially for
finished goods and raw materials. Rise in sales and favourable market conditions lead
to a rise in inventory levels. It was also inferred that sales increased more as compared
to inventory.
Lwiki et al 2013
A survey conducted on all the eight (8) sugar manufacturing firms in Kenya established
that there is generally positive correlation between each of inventory management
practices. Specific performance indicators were proved to depend on the level of
inventory management practices. They established that Return on Equity had a strong
correlation with lean inventory system and strategic supplier partnerships. As such, they
concluded that the performance of sugar firms could therefore be stated as being a
function of their inventory management practices.
Jon Schreibfeder 1992
He said that it is anything but difficult to transform money into stock, the test is to
transform stock over into money. In mid 1990‟s numerous merchants perceive that they
required help controlling and bringing off their biggest resource stock. In answer to this
need, a few organizations created thorough stock administration modules and
frameworks. These new programming frameworks incorporate numerous novel
elements intended to help merchants successfully oversaw stockroom stock. When
experiencing this numerous wholesalers don't feel that they have picked up authority of
their stock.
Wolf Bagby, Managing stock
In this study Mr. W.Bagby clarifies that by dealing with the stock it gets to be simpler for
the association to meet the benefit objectives, shorter the money cycle, evade stock
lack, maintain a strategic distance from over the top conveying expenses for unused
stock, and enhance gainfulness by diminishing the money change and embrace a JIT
framework. As per this study organizations need to get brilliant about stock. Boosting
money related execution is another advantage that originates from better stock
administration. Contaminate huge number of makers appreciate investment funds and
better execution by picking the methodology of stock decrease. For this organization
needs to expand the income and productivity and this incorporates keeping an
attentive observing eye on charge in supply and request.
Rich Lavely 1998
Asserts that inventory means “Piles of Money” on the shelf and the profit for the firm.
However, he notices that 30% of the inventory of most retail shops is dead. Therefore,
he argues that the inventory control is facilitate the shop operations by reducing rack
time and thus increases profit. He also elaborates the two types of inventory
calculations that determine the inventory level required for profitability. The two
calculations are “cost to order” and “cost to keep”. Finally, he proposes seven steps to
inventory control.
Asfaque Ahmed October 12, 2004
He said that a large portion of the assembling organization merchants have arranging
and booking item which accept either limitless creation limit for computing amounts of
crude material and work in advancement (WIP) necessities or unending amounts of
crude material and WIP materials for figuring generation limit. There are numerous
issues with this methodology and how to keep away from these by verifying that the
item you are purchasing for sure considers limited quantities of obliged materials and
additionally limited limits of work focuses in your assembling offices.
D. Hoopman April 7, 2003
In this article he said that stock advancement perceive that distinctive industry have
diverse stock profiles and prerequisites. Exploration has shown that arrangements are
estimated in an expansive extent from a huge number of dollars to a large number of
dollars. In this corner business sector segment cost is without a doubt not a pointer of
the nature of arrangement, ROI and ease of use are principal.
Silver, Edward A Dec22, 2002
This article considers the setting of a populace of things for which the presumption
hidden the EOQ inference holds sensibly well. Then again, as is regularly the trade out
the practices there is a total requirement that applies to the populace all in all. Two
basic types of requirements are:
1)The financial backing's presence to be dispensed among the things' supplies and
2) A buying, generation office having the ability to process at most a sure number of
recharging every year. In light of the imperative the individual renewal amounts can't be
chosen autonomously.
Charles Atkinson
In the study by Mr. Charles Atkinson, he clarified the stock administration and appraisal of
stock levels. According to this study stock administration need to address two issues
Part I. Instructions to streamline normal stock levels.
Part II. Instructions to survey (assess) stock levels.
This study tells about what the director ought to and not to do, and the amount of sum
ought to be requested in one set requests. Normal stock can be computed by
oversimplified technique.
Normal stock = starting stock +end stock/2
Delaunay C, Sahin E, 2007.
A great deal of work has been done, however now in the event that we need to proceed,
we must have great perceivability upon this field of examination. That is the reason we
concentrated on a system for a comprehensive audit on the issue of production network
administration with stock errors. The creator said that their point in this work is
additionally to exhibit the most imperative measure that permits a refinement between
the diverse sort of dealing with the stock.
Panigrahi 2013
Undertook an in-depth study of inventory management practices followed by Indian

cement companies and its affect on working capital efficiency. The study also
investigated the relationship between profitability and inventory conversion days. The
study, using a sample of the top five cement companies of India over a period of 10
years from 2001 to 2010, concluded that a considerable inverse linear relationship
existed between inventory conversion period and profitability
CHAPTER 3
RESEARCH METHODOLOGY
The examination approach is one of the primary parts of extremely research. This
clarifies how the analyst leads this undertaking. The word examination demonstrates
the mode or the method for fulfilling an end. The cutting edge world is loaded with
experimental creations and looks for an investigative viewpoint to everything. Any
experimental methodology ought to have a technique or diagram to be taken after to
accomplish a specific objective. Through methodological, methodical strategy, we can
consider exactness and an obvious conclusion. There is no order without a philosophy.
The approach received in this study is talked about beneath to sum things up.
3.1 NEED FOR THE STUDY

This is required by the firm for:
1. To keep away from unnecessary and deficient levels of inventories in the
organization.
2. To increase Consumer Satisfaction through Short, convenient conveyance.
3. To keep up an adequate inventory techniques in the organization for the smooth
creation and self operation.
4. To maintain the business operations of the organization in smooth and adequate
way.
3.2 SCOPE OF THE STUDY
 To give the arrangement to the organization what to arrange, when to arrange and
the amount to arrange
 It is helpful for choosing working strategy and volume of stock.
 It serves to build up the strategies for the officials in stock.
 The undertaking serves to manage determining in stock.

3.3 OBJECTIVES OF THE STUDY
The main objectives of inventory management are operational and financial.
The operational objectives mean that the materials and spares should be available in
sufficient quantity so that work is not disrupted for want of inventory. The financial
objective mean that investments in inventories should not remain idle and minimum
working capital should be locked in it. The followings are the objectives of inventory
technical management.
3.4 RESEARCH DESIGN
A research design is a framework for conducting the research project. It details the
procedure necessary for obtaining the information needed to structure and solve
research problem. A research design the foundation for conducting the project.
3.5 SOURCES OF DATA
PRIMARY SOURCES OF DATA
Data collection:
SECONDARY SOURCES OF DATA
This data is collected from journals, articles, internets, dissertation and research.
STATISTICAL TOOLS
The data collected through ABC analysis and EOQ analysis.
PERIOD OF STUDY
PRIMARY OBJECTIVES
A study on inventory control techniques with reference to ALLOYSYS EXTRUSION.
SECONDARY OBJECTIVES
1) To study about the ordering levels for the important components of inventory.
2) To measure economic order quantity for the selected raw material items.
3) To analysis its inventory control methods with the help of ABC analysis etc.
4) To offer suitable suggestions for the improvement of inventory management

practices.
SAMPLE SIZE
The example strategy is utilized for the exploration is a
3.6 LIMITATIONS OF THE STUDY

 The study is confined to Alloysys Extrusion
 A registration review is unrealistic because of the time period so I have chosen

test study
 There is a probability of examining slips in the study.
 The reactions of the buyers may not be bona fide.
 The inquiries included in the poll may not be understood.
 Some of the data was private, so much data was not uncovered
 Lack of expert methodology since the specialist is an understudy.
CHAPTER 4
DATA ANALYSIS AND ITS INTERPRETATION
Valuation of Inventories:
A. At Plant:
 Stores & Spares (including coal) = At weighted average cost.
 Raw Materials, Finished Goods & Work in Process = At Lower of Cost or Net
Realizable Value. Annual cost is computed on full absorption costing method
including material cost and conversion costs.
 Automobile parts of Sub-standard Quality = At Lower of Cost or Net Realizable

Value as estimated by the Company. Annual cost is computed on full absorption
costing method including material cost and conversion costs.

B. At Field:
Finished Goods = At Lower of Cost or Net Realizable Value. Annual cost is computed on
full absorption costing method including material cost and conversion costs. Costs of
field stocks include freight to the destination.
Automobile parts of Sub-standard Quality = At Lower Costs or Net Realizable Value as

estimated by the Company.
 Note:
Net realizable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and estimated costs necessary to
make the sale.
1. Analysis of Inventory Management
The total inventory management of the company includes the raw materials
inventory, work in process inventory, finished goods inventory. The total inventory of the
company in 2018 is Rs. 40503.38 lacks. Alloysys Extrusion has total of approx. 214683
different types of inventories.
TABLE NO:1 (In lakhs)
Particulars 2014 2015 2016 2017 2018
Total 26957.87 40178.27 38599.79 43075.71 40503.38
GRAPH NO: 1
50000
40000
30000
20000
10000
0
2014 2015 2016 2017 2018
The above graph shows the total inventory management of the company various parts
The report includes different parts of analysis of the inventory management

which is as follows:
1. Analysis of the composition of inventory.

2. Effects of the various inventory ratios.
3. Study of the different inventory management techniques
4. Find out the inventory management and control practice at Alloysys Extrusion
5. The analysis of the report is divided into main four parts, which are
A. Under composition of inventory
B. Various inventory ratios
C. Techniques of inventory
D. Control of inventory
Analysis of inventory management
Inventory conversion period is very closely related to the inventory

management.
Inventory conversion is the part of the net operating cycle.
1. Raw material conversion period

2. Work in process conversion period
3. Finished goods conversion period.
DIAGRAM NO: 8
NET OPERATING CYCLE
PAYABLE DIFFERED
GROSS OPERAING CYCLE
PERIOD
INVENTORY CONVERSION DEBTOR CONVERSION

PERIOD PERIOD
RAW MATERIAL CONVERSION

PERIOD
FINISHED GOODS CONVERSION

PERIOD
WORK IN PROCESS CONVERSION

PERIOD
1. Raw Material Conversion Period:
Average Raw material Inventory
= ______________________________
Total Raw material consumption
Particulars 2014 2015 2016 2017 2018
Average R.M. Inventory 4041.72 5274.76 5522.4 6090.595 8270.05
Total R.M. Consumption 214.72 294.78 341.99 343.39 346.56
R.M. Conversion Period 19 days 18 days 16 days 18 days 24 days
GRAPH NO:2
25
20
15
10
0
2014 2015 2016 2017 2018
Interpretation:
Raw material conversion period is the time period between receiving the raw
material and sending them for production. It is the period of stocking the raw materials
for usage. So higher the ratio lower will be the profit. In the above chart raw material
conversion period lies between 15 to 19 days for the last five years. In 2014 it is 19
times which is not good for the company because higher the ratio the lower will be the
profit. In 2017 the ratio is 18 times which is also very high and so not good for the
company. So company should try to reduce it.
2. Work in Process Conversion Period:

Average WIP Inventory
= ____________________
Cost of Production
Particulars 2014 2015 2016 2017 2018
Average WIP Inventory 2422.75 1793.74 2015.60 2707.93 1110.41
Cost of Production 520 702.81 815.20 837.84 498.04
W.I.P Conversion Period 2 days

5 days 3 days 2 days 3 days
GRAPH NO:3
0
2014 2015 2016 2017 2018
Interpretation:
Work-in-progress conversion period is the time period when the raw materials
are received for production and the time for their dispatch. The higher the ratio the lower
will be the profitability. In 2016 the ratio is 2 days which is too low and so it is good for
the company. But in 2014 the ratio is 5 days which is too high. But in 2017 the ratio is 3
days which is low and so good for the company. But as we have not compared it with
other companies any decision can’t be taken.
3. Finished Goods Conversion Period:
Particulars 2014 2015 2016 2017 2018
Days in a year 365 365 365 365 365
Finished goods turnover

34
ratio 42 28 27 26
Finished Goods Conversion
11 days
Period 9 days 13 days 13 days 14 days
Finished goods Conversion period= Days in a year(365)/Finished goods turnover

ratio
GRAPH NO: 4
14
12
10
8
6
4
2
0
2014 2015 2016 2017 2018
Interpretation:
Finished goods conversion period is the time of storage of finished goods in the
warehouse until they are sold. The higher the ratio the low will be the profit. If we store
the huge stock in warehouse then we are losing the opportunity cost. In 2014 the ratio is
9 days which increased by 5 days i.e. 39 days in 2017 which is not good. But in 2018
the ratio is 11 days which indicates that huge stock in laying at the go down and so the
company is losing its profit and so the profit in that year is very low.
4. Inventory Conversion Period
Particulars 2014 2015 2016 2017 2018
R.M. Conversion Period 19 days 18 days 16 days 18 days 24 days
W.I.P. Conversion Period 2 days

F.G. Conversion Period 11 days
Inventory Conversion
6 days
Period 8 days 9 days 9 days 7 days
GRAPH NO:5
50000
40000
30000
20000
10000
0
2014 2015 2016 2017 2018
Interpretation:
Inventory conversion period indicates in how much days our inventory gets
converted. In this ratio we will consider the entire inventory ratio. We will consider all
type of inventories i.e. raw materials, work in process and finished goods. The higher
the ratio the higher will be the profitability. In 2015 the ratio is 9 days which shows that
in this year huge amount of profit the company has earned. So in this year the profit is
very high as compared to other year. But in 2017 the ratio is 7 days which is very huge
because the finished goods conversion period is huge.
Various Inventory Ratios:
A. Total Investment in Inventory

B. Total Inventory Turnover Ratio
C. Work in Process Turnover Ratio
D. Finished Goods Turnover Ratio
A. Total Investment in Inventory:
TABLE NO: 6 (In lakhs)
Particulars 2014 2015 2016 2017 2018
Inventory 26957.87 38846.52 38599.79 43075.71 40503.38
GRAPH NO:6
50000
40000
30000
20000
10000
0
2014 2015 2016 2017 2018
Interpretation:
The above chart indicates the amount of inventory with the company. The lower
the amount the higher will be the profit but higher the amount the lower will be profit.
There is inverse relation between profit and inventory. From the above chart it can be
seen that in 2017 the amount of inventory is Rs. 43089 (in lakhs) due to which the profit
also reduced and so the profit is low in 2014.
B. Total Inventory Turnover Ratio:
Total inventory turnover ratio is concerned with the cost of goods sold and
average inventory. Total inventory turnover ratio is shows how many times inventory is
replaced during the year symbolically,
Costs of goods sold (sales)
________________________
Average Inventory
TABLE NO: 7 (In lakhs)
Particulars 2014 2015 2016 2017 2018
Cost of Goods sold 183477.88 246727.93 308082.7 270857.57 249289.07
Average Inventory 26516.65 32902.2 38723.16 40837.75 41789.545
Inventory Turnover
Ratio 7 days 7 days 8 days 7 days 6 days
GRAPH NO: 7
8
7
6
5
4
3
2
1
0
2014 2015 2016 2017 2018
Interpretation:
Inventories represent stocks of readymade goods or raw materials that are
needed to be kept in order to be able to meet the orders of clients. The higher the ratio
the higher will be the profit and lower the ratio lower will be the profit. In Alloysys
Extrusion the inventory turnover ratio for the year 2018 is 6 times which is lowest and
resulted into low profitability. The highest ratio is found in 2016 which is 8 times and it is
very good for the company. But any decision can’t be taken for it because we have just
compared the data of past five years of Alloysys Extrusion only and not of four to five
other companies ratios which are coming under this industry.
C. Work in Progress Turnover Ratio:
Work in process turnover ratio is concerned with the cost of goods sold and
average work in process inventory. Work in process turnover ratio shows how many
times work in process inventory is replaced during the year. Symbolically,
Cost of production
= ___________________
Average WIP Inventory

Particulars 2014 2015 2016 2017 2018
Cost of production 520 702.81 815.20 837.84 498.04
Average WIP 2422.75 1793.74 2031.60 2707.93 1110.41
Work in Process Turnover

Ratio 0.21 days 0.39 days 0.40 days 0.31 days 0.45 days
GRAPH NO:8
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2014 2015 2016 2017 2018
Interpretation:
Work in process indicates the stock withdrawn from warehouse and are yet to get
converted into finished stock. The higher the ratio the higher will be the management
efficiency. In 2016 the ratio is approx 0.40 times which shows good profitability for the
company. But it reduced to 0.31 times in 2017 which shows decrease in profitability,
company is taking more time to produce finished goods which is not good for the
company.
D. Finished Goods Turnover Ratio:
Finished goods turnover ratio is concerned with the cost of goods sold and
average finished goods inventory. Finished goods turnover ratio indicates how many
times finished goods are replaced during the year. Symbolically,
Costs of goods sold
=____________________________
Average finished goods inventory
Particulars 2014 2015 2016 2017 2018
Cost of goods sold 183477.88 246727.93 308082.7 270857.57 249289.07
Average finished goods 4351.265 8795.65 11532.51 10332.275 7251.50
Finished Goods 42 times 28 times 27 times 26 times 34 times

Turnover Ratio
GRAPH NO: 9
50
40
30
20
10
0
2014 2015 2016 2017 2018
Interpretation:
Finished goods turnover ratio indicates how much time finished goods gets
turnover. The higher the ratio the more will be the sales and vice versa. But after it
subsequently reduces and lasts to 26 times in 2017 which is not a good sign for the
company. It shows that company is holding huge stock at warehouse.
ABC ANALYSIS
ANNUAL USAGE VALUE OF PRODUCT “X” FOR THE YEAR 2018
ANNUAL % OF
USAGE
SNO DESCRRIPTION USAGE
(INLAKHS)
1 Spindle Unit Assembly (1) 70 5.6
2 Brush, Plate, Plug, Switch, Cover, Assembly 40.00 3.2
3 Cover Assembly 99.54 8.05
4 Spindle Unit Assembly (2) 47.50 3.84
5 Gear boxing 42.07 3.40
6 Mounting Bracket Assembly 85.25 6.90
7 Wiping System 147.01 11.90
8 Assembly Bracket 37.23 3.01
9 Wheel Box Assembly 30.36 2.45
10 Link End Assembly 26.50 2.14
11 Limit Switch 21.00 1.70
12 Shaft Link & Pin Assembly 22.50 1.82
13 Bundy Tube 17.50 1.41
14 Brush Plate 23.00 1.86
15 Brush Plate Cover 30.52 2.47
16 Primary Tube Assembly 19.89 1.61
17 Gear Box Assembly 28.90 2.34

18 Ball Bearing 18.80 1.52
19 Thermal Cut 19.52 1.58
20 Shaft Assembly 19.28 1.56
21 Brush Plating Assembly 29.85 2.41
22 Rear Mounting Bracket 21.16 1.71
23 Washer 5.41 0.43
24 Steel Ball 5.63 0.45
25 Screw 5.31 0.42
26 Bolt 5.99 0.48
27 Nut 5.48 0.44
28 Pressure Pad 5.18 0.41
29 Spring Clip 5.16 0.41
30 Con & Bush Assembly 5.57 0.45
31 Felt Washer 5.12 0.42
32 Ferrule 6.96 0.56
33 Label 5.65 0.45
34 Switch Unit 5.64 0.44
35 Final Gear Assembly 8.40 0.68
36 Bearing Bush 8.11 0.65
37 Magnet 9.51 0.77
38 Pole 10.90 0.88
39 Commutator 6.56 0.53

40 Primary Link Assembly 7.72 0.62
41 Carbon Brush 6.10 0.52
42 Rotator Link 9.80 0.50
43 Bearing Pin 7.62 0.80
44 Rubber Pad 6.43 0.50
45 Armature Insul 6.21 0.90
46 Bundy Tube With Nut 10.00 0.80
47 Crank Pin 6.22 0.89
48 Crank Plate 7.61 0.72
49 Spindle 11.14 0.49
50 Needle Bearing 11.09 0.48
51 Plug Moulding 8.99 0.41
52 Nozzle Holder 6.09 0.44
53 Self Tap Screw 6.00 0.45
54 Screw Cover Plate 5.16 0.45
55 Lock Nut 5.48 0.44
56 Spring Washer 5.535 0.48
57 Circlip 5.635 0.44
58 Rivet 5.4625 0.44
59 Seal 5.94 0.48
60 Protective Cover 5.605 0.43
61 Breather Plug 5.50 0.44

62 Thrust Screw 5.975 0.48
63 Gasket 5.685 0.43
64 Trust Pad 5.265 0.43
65 Yoke 40.5892 3.28
66 Bundy tube With Nut 10.00 0.80
TOTAL 1235.00 100.00
A ITEMS:
SNO DESCRIPTION VALUE Percentage

(in lakhs)
2 Brush, Plate, Plug, Switch, Cover, 40.00 3.2

Assembly
3 Cover Assembly K 200 M 99.54 8.05
4 Spindle Unit Assembly 47.50 3.84
5 Gear Boxing (Hyundai) 42.07 3.40
7 Wiping System (Indica) 147.01 11.90
10 Brush Plate Assembly 30.52 2.47

TOTAL 670.00 74.00
B ITEMS :
SNO DESCRIPTION VALULE Percentage

(in lakhs)
2 Limit Switch 21.00 1.70
3 Shaft Link & Pin Assembly 22.50 1.82
4 Bundy Tube 17.50 1.41
5 Brush Plate 23.00 1.86
7 Ball Bearing 18.80 1.52
8 Thermal Cut 19.52 1.58
9 Shaft Link Pin Assembly 19.28 1.56
10 Yoke 21.16 1.71
TOTAL 250.00 21.00

C ITEMS:

(in lakhs)
1 Washer 5.41 0.43
2 Steel Ball 5.63 0.45
3 Screw 5.31 0.42
4 Bolt 5.99 0.48
5 Nut 5.48 0.44
7 Spring Clip 5.16 0.41
9 Felt Washer 5.12 0.42
10 Ferrule 6.96 0.56
11 Label 5.65 0.45
12 Switch Unit 5.64 0.44
14 Bearing Bush 8.11 0.65
15 Magnet 9.51 0.77
16 Pole 10.90 0.88
17 Commutator 6.56 0.53

29 Carbon Brush 6.10 0.52
20 Rotator Link 9.80 0.50
21 Bearing Pin 7.62 0.80
22 Rubber Pad 6.43 0.50
24 Bundy Tube With Nut 10.00 0.80
25 Crank Pin 6.22 0.89
26 Crank Plate 7.61 0.72
27 Spindle 11.14 0.49
31 Self Tap Screw 6.00 0.45
32 Lock Nut 5.48 0.44
34 Circlip 5.635 0.44
35 Rivet 5.4625 0.44
36 Seal 5.94 0.48

39 Thrust Screw 5.975 0.48
40 Gasket 5.685 0.43
41 Trust Pad 5.265 0.43
TOTAL 315.00 5.00
ABC ANALYSIS
80 74
70
60
50
40
ABC ANALYSIS
30
21
20
10 5
0
A B C
Interpretation:
The above raw material has been categorized as “A” clas material and should be
kept under rigorous control as the investment in the inventory constitute more than 70%
value of the total investment made in raw material inventory.
The company should direct its most of the inventory control efforts to the items
included in the category.
Although the number of items which constitutes “B” & “C” category is not fairly
large investment in these category is less than 30% and which warrant the minimum
attention.
During the discussion and clarification with the executives of the company
controlling production and stores we were explained that the raw material which were
grouped under “B” & “C” category even though critical to the production process were
available easily.
While making the analysis utmost care was taken not to include critical raw
material essential for production process which is not available easily in the market
even though it involves small investment in “B” & “C” category.
SNO DESCRRIPTION ANNUAL % OF

USAGE
USAGE
(INLAKHS)
2 Brush, Plate, Plug, Switch, Cover, Assembly 60 3.489305
3 Cover Assembly 97.58 5.674773
5 Gear boxing 60.5 3.518383
7 Wiping System 152.01 8.840155
11 Limit Switch 29 1.686498
12 Shaft Link & Pin Assembly 52 3.024065
13 Bundy Tube 19.58 1.138677
14 Brush Plate 31 1.802808
15 Brush Plate Cover 30.52 1.774893
18 Ball Bearing 30.17 1.754539

19 Thermal Cut 10 0.581551
21 Brush Plating Assembly 20 0.581551
23 Washer 6.29 0.365796
24 Steel Ball 10 0.581551
25 Screw 12.5 0.726939
26 Bolt 14.65 0.851972
27 Nut 4.63 0.269258
28 Pressure Pad 5 0.290775
29 Spring Clip 7.3 0.424532
31 Felt Washer 6.14 0.357072
32 Ferrule 7.8 0.45361
33 Label 12.27 0.713563
34 Switch Unit 15.3 0.889773
36 Bearing Bush 8.11 0.471638
37 Magnet 9.51 0.553055
38 Pole 10.9 0.63389
39 Commutator 6.56 0.381497

41 Carbon Brush 16 0.930481
42 Rotator Link 36.6 2.128476
43 Bearing Pin 7.62 0.443142
44 Rubber Pad 69 4.012701
46 Bundy Tube With Nut 15 0.872326
47 Crank Pin 17 0.988636
48 Crank Plate 8.6 0.500134
49 Spindle 11 0.639706
51 Plug Moulding 9 0.523396
52 Nozzle Holder 12 0.697861
53 Self Tap Screw 4.36 0.253556
55 Lock Nut 5.5 0.319853
56 Spring Washer 6 0.348931
57 Circlip 3.5 0.203543
58 Rivet 9.68 0.562941
59 Seal 10.57 0.614699
61 Breather Plug 16.67 0.969445
62 Thrust Screw 20 1.163102

63 Gasket 50 2.907754
64 Trust Pad 8.35 0.485595
65 Yoke 56 3.256685
66 Bundy tube With Nut 74 4.303477
TOTAL 1719.54 100

A ITEMS:

(in lakhs)
2 Brush, Plate, Plug, Switch ,Cover, 60 3.489305

Assembly
3 Cover Assembly K 200 M 97.58 5.674773
10 Brush Plate Assembly 31 1.802808
TOTAL 761.94 43.73%

B ITEMS :

(in lakhs)
4 Bundy Tube 19.58 1.138677
5 Brush Plate 31 1.802808
7 Ball Bearing 30.17 1.754539
8 Thermal Cut 10 0.581551
9 Shaft Link Pin Assembly 56 3.02406
10 Yoke 56 3.256685
TOTAL 396.79 21.89%

C- ITEMS:

(in lakhs)
1 Washer 6.29 0.365796
2 Steel Ball 10 0.581551
3 Screw 12.5 0.726939
4 Bolt 14.65 0.851972
5 Nut 4.63 0.269258
6 Pressure Pad 5 0.290775
7 Spring Clip 7.3 0.424532
9 Felt Washer 6.14 0.357072
10 Ferrule 7.8 0.45361
11 Label 12.27 0.713563
12 Switch Unit 15.3 0.889773
14 Bearing Bush 8.11 0.471638
15 Magnet 9.51 0.553055
16 Pole 10.9 0.63389
17 Commutator 6.56 0.381497

20 Rotator Link 36.6 2.128476
21 Bearing Pin 7.62 0.443142
22 Rubber Pad 69 4.012701
25 Crank Pin 17 0.988636
26 Crank Plate 8.6 0.500134
27 Spindle 11 0.639706
31 Self Tap Screw 4.36 0.253556
32 Lock Nut 6.39 0.371611
34 Circlip 6 0.348931
35 Rivet 3.5 0.203543
36 Seal 9.68 0.562941

39 Thrust Screw 16.67 0.969445
40 Gasket 50 2.907754
41 Trust Pad 8.35 0.485595
TOTAL 535.06 31.12%
50 ABC ANALYSIS
43.73
45
40
35 31.12
30
25 21.89
20
15 ABC ANALYSIS
10
5
0
A B C
Interpretation:
The above raw material has been categorized as “A” class material and should
be kept under rigorous control as the investment in the inventory constitute less than
70% value of the total investment made in raw material inventory.
Although the number of items which constitutes “B” category is not fairly large
investment in this category is less than 30% and which warrant the minimum attention.
And the “C” Category is more than 30% which needs a nominal attention
The raw material which was grouped under “B” & “C” category even though
critical to the production process was available easily.

USAGE
USAGE
(INLAKHS)
2 Brush, Plate, Plug, Switch,Cover,Assembly 56.86 2.814796
3 Cover Assembly 102 5.049405
5 Gear boxing 36.28 1.796004
10 Link End Assembly 10 0.49504
11 Limit Switch 9.57 0.473753
13 Bundy Tube 19.63 0.971763
14 Brush Plate 30 1.485119
15 Brush Plate Cover 38 1.881151
18 Ball Bearing 40 1.980159

19 Thermal Cut 42.68 2.112829
20 Shaft Assembly 12 0.594048
22 Rear Mounting Bracket 25 1.237599
23 Washer 26.54 1.313835
24 Steel Ball 17.2 0.851468
25 Screw 20.5 1.014831
26 Bolt 15 0.74256
27 Nut 5 0.24752
28 Pressure Pad 9.83 0.486624
29 Spring Clip 6.89 0.341082
30 Con & Bush Assembly 14 0.693056
31 Felt Washer 7.75 0.383656
32 Ferrule 9 0.445536
33 Label 14 0.693056
34 Switch Unit 8.9 0.440585
36 Bearing Bush 75 3.712798
37 Magnet 39 1.930655
38 Pole 19 0.940575
39 Commutator 6.88 0.340587

41 Carbon Brush 15.26 0.755431
42 Rotator Link 37.8 1.87125
43 Bearing Pin 8.2 0.405933
44 Rubber Pad 86 4.257341
45 Armature Insul 90 4.455357
47 Crank Pin 15.56 0.770282
48 Crank Plate 41.2 2.039564
49 Spindle 4.68 0.231679
50 Needle Bearing 15 0.74256
53 Self Tap Screw 10 0.49504
55 Lock Nut 60 2.970238
57 Circlip 14 0.693056
58 Rivet 20.75 1.027207
59 Seal 18 0.891071
60 Protective Cover 50 2.475199
61 Breather Plug 13.74 0.680185

63 Gasket 42 2.079167
64 Trust Pad 8.35 0.413358
65 Yoke 67 2.970238
TOTAL 2020.04 100

ITEMS-A

(in lakhs)
2 Brush,Plate,Plug,Switch,Cover,Assembly 56.86 2.814796
3 Cover Assembly K 200 M 102 5.049405
TOTAL 602.56 29.83%

ITEMS-B

(in lakhs)
2 Limit Switch 9.57 0.473753
4 Bundy Tube 19.63 0.971763
5 Brush Plate 30 1.485119
6 Primary Tube Assembly 38 1.881151
7 Ball Bearing 29.58 1.464327
8 Thermal Cut 28.72 1.421754
10 Yoke 67 2.970238
TOTAL 357.5 17.35%

C- ITEMS

(in lakhs)
1 Washer 26.54 1.313835
2 Steel Ball 17.2 0.851468
3 Screw 20.5 1.014831
4 Bolt 15 0.74256
5 Nut 5 0.24752
6 Pressure Pad 9.83 0.486624
7 Spring Clip 6.89 0.341082
9 Felt Washer 7.75 0.383656
10 Ferrule 9 0.445536
11 Label 14 0.693056
12 Switch Unit 8.9 0.440585
14 Bearing Bush 75 3.712798
15 Magnet 39 1.930655
16 Pole 19 0.940575
17 Commutator 6.88 0.340587

29 Carbon Brush 15.26 0.755431
20 Rotator Link 37.8 1.87125
21 Bearing Pin 8.2 0.405933
22 Rubber Pad 86 4.257341
25 Crank Pin 15.56 0.770282
26 Crank Plate 41.2 2.039564
27 Spindle 15 0.74256
31 Self Tap Screw 10 0.49504
32 Lock Nut 7.77 0.384646
34 Circlip 38 0.018811
35 Rivet 14 0.693056
36 Seal 20.75 1.027207
38 Breather Plug 50 2.475199

39 Thrust Screw 13.74 0.680185
40 Gasket 42 2.079167
41 Trust Pad 8.35 0.413358
TOTAL 992.11 47.25%
ABC ANALYSIS
50 47.25
45
40
35
29.83
30
25
ABC ANALYSIS
20 17.35
15
10
5
0
A B C
Interpretation:
be kept under rigorous control as the investment in the inventory constitute less than
The company should direct its most of the inventory control efforts to the items
included in the category.
Although the number of items which constitutes “B” category is not fairly large
investment in these category is less than 30% and which warrant the minimum
attention. Category “C” items are used adversely in this year. Proper investment is
needed to handle this products.
While making the analysis utmost care was taken not to include critical raw
material essential for production process which is not available easily in the market
even though it involves small investment in “B” & “C” category.
ABC ANALYSIS-2013

USAGE
USAGE
(INLAKHS)
2 Brush, Plate, Plug, Switch,Cover,Assembly 59.25 3.900721
5 Gear boxing 62 4.081767
6 Mounting Bracket Assembly 90 5.925146
11 Limit Switch 27.8 1.830212
13 Bundy Tube 26 1.711709
14 Brush Plate 27.33 1.799269

23 Washer 5.24 0.344975
24 Steel Ball 8 0.52668
25 Screw 13.68 0.900622
26 Bolt 15 0.987524
27 Nut 4 0.26334
28 Pressure Pad 4.65 0.306133
29 Spring Clip 3.2 0.210672
31 Felt Washer 7.25 0.477303
32 Ferrule 6.28 0.413443
33 Label 13.28 0.874288
34 Switch Unit 8.28 0.545113
36 Bearing Bush 8.92 0.587248
37 Magnet 9.52 0.626749
38 Pole 9 0.592515
39 Commutator 5.5 0.362092
42 Rotator Link 30 1.975049
43 Bearing Pin 7 0.460845
44 Rubber Pad 67 4.410942
47 Crank Pin 12 0.790019
48 Crank Plate 8.2 0.539847
49 Spindle 5.99 0.394351
53 Self Tap Screw 4.28 0.281774
55 Lock Nut 5.26 0.346292
57 Circlip 3.5 0.230422
58 Rivet 9 0.592515
59 Seal 10 0.65835

61 Breather Plug 16.25 1.069818
62 Thrust Screw 20.5 1.349617
63 Gasket 52 3.423417
64 Trust Pad 6.57 0.432536
65 Yoke 52 3.423417
TOTAL 1518.95 100

A ITEMS:

(in lakhs)
2 Brush,Plate,Plug,Switch,Cover,Assembly 59.25 3.900721
4 Spindle Unit Assembly 23 1.514204
5 Gear Boxing (Hyundai) 62 4.081767
6 Mounting Bracket Assembly 90 5.925146
TOTAL 661.3 43.30

B ITEMS :

(in lakhs)
2 Limit Switch 27.8 1.830212
4 Bundy Tube 26 1.711709
5 Brush Plate 27.33 1.799269
10 Yoke 52 3.423417
TOTAL 328.69 21.64

C ITEMS:

(in lakhs)
1 Washer 5.24 0.344975
2 Steel Ball 8 0.52668
3 Screw 13.68 0.900622
4 Bolt 15 0.987524
5 Nut 4 0.26334
6 Pressure Pad 4.65 0.306133
7 Spring Clip 3.2 0.210672
9 Felt Washer 7.25 0.477303
10 Ferrule 6.28 0.413443
11 Label 13.28 0.874288
12 Switch Unit 8.28 0.545113
14 Bearing Bush 8.92 0.587248
15 Magnet 9.52 0.626749
16 Pole 9 0.592515
17 Commutator 5.5 0.362092

22 Rubber Pad 67 4.410942
25 Crank Pin 12 0.790019
26 Crank Plate 8.2 0.539847
27 Spindle 5.99 0.394351
31 Self Tap Screw 4.28 0.281774
32 Lock Nut 5.26 0.346292
34 Circlip 3.5 0.230422
35 Rivet 9 0.592515
36 Seal 10 0.65835
38 Breather Plug 16.25 1.069818

39 Thrust Screw 20.5 1.349617
40 Gasket 52 3.423417
41 Trust Pad 6.57 0.432536
TOTAL 502.6 33.09
ABC ANALYSIS
50
45 43.3
40
35 33.09
30
25 21.64 ABC ANALYSIS
20
15
10
5
0
A B C
Interpretation:
be kept under rigorous control as the investment in the inventory constitute more than
The “B” category products is not fairly large investment in these category is less
than 30% and which warrant the minimum attention. The “C” category products need
nominal investment and need minimal control.
ABC ANALYSIS-2011

USAGE
USAGE
(INLAKHS)
2 Brush, Plate, Plug, Switch,Cover,Assembly 56 3.803366
5 Gear boxing 24.49 1.663293
7 Wiping System 105.88 7.191078
9 Wheel Box Assembly 50 3.395862
13 Bundy Tube 24.48 1.662614
14 Brush Plate 26.3 1.786224
17 Gear Box Assembly 18 1.22251

18 Ball Bearing 18.9 1.283636
19 Thermal Cut 9.45 0.641818
20 Shaft Assembly 3 0.203752
23 Washer 5.24 0.355886
24 Steel Ball 7 0.475421
25 Screw 13 0.882924
26 Bolt 10 0.679172
27 Nut 7 0.475421
28 Pressure Pad 4.2 0.285252
29 Spring Clip 5 0.339586
31 Felt Washer 7.3 0.495796
32 Ferrule 3.27 0.222089
33 Label 10.28 0.698189
34 Switch Unit 9.27 0.629593
35 Final Gear Assembly 12 0.815007
36 Bearing Bush 10.11 0.686643
37 Magnet 9 0.611255
38 Pole 15 1.018759
39 Commutator 5 0.339586
40 Primary Link Assembly 3 0.203752
44 Rubber Pad 60 4.075035
47 Crank Pin 10 0.679172
48 Crank Plate 9 0.611255
49 Spindle 6 0.407503
53 Self Tap Screw 4.27 0.290007
54 Screw Cover Plate 13 0.882924
55 Lock Nut 8 0.543338
57 Circlip 2.5 0.169793
58 Rivet 9.6 0.652007
59 Seal 10 0.679172

63 Gasket 47 3.192111
64 Trust Pad 8 0.543338
65 Yoke 57 3.871283
TOTAL 1472.38 100.1358

A ITEMS:

(in lakhs)
2 Brush,Plate,Plug,Switch,Cover,Assembly 56 3.803366
4 Spindle Unit Assembly 20 1.358345
9 Wheel Box Assembly 50 3.395862
11 Gear Box Assembly 18 1.22251
TOTAL 598.46 40.34

B ITEMS :

(in lakhs)
4 Bundy Tube 24.48 1.662614
5 Brush Plate 26.3 1.786224
7 Ball Bearing 18.9 1.283636
8 Thermal Cut 9.45 0.641818
10 Yoke 57 3.871283
TOTAL 339.13 23.17

C ITEMS:

(in lakhs)
1 Washer 5.24 0.355886
2 Steel Ball 7 0.475421
3 Screw 13 0.882924
4 Bolt 10 0.679172
5 Nut 7 0.475421
7 Spring Clip 5 0.339586
9 Felt Washer 7.3 0.495796
10 Ferrule 3.27 0.222089
11 Label 10.28 0.698189
12 Switch Unit 9.27 0.629593
13 Final Gear Assembly 12 0.815007
14 Bearing Bush 10.11 0.686643
15 Magnet 9 0.611255
16 Pole 15 1.018759
17 Commutator 5 0.339586
18 Primary Link Assembly 3 0.203752

22 Rubber Pad 60 4.075035
25 Crank Pin 10 0.679172
26 Crank Plate 9 0.611255
27 Spindle 6 0.407503
31 Self Tap Screw 4.27 0.290007
32 Lock Nut 8 0.543338
34 Circlip 2.5 0.169793
35 Rivet 9.6 0.652007
36 Seal 10 0.679172

40 Gasket 47 3.192111
41 Trust Pad 8 0.543338
42 Screw Cover Plate 13 0.882924
TOTAL 512.79 34.83
ABC ANALYSIS
45
40.34
40
34.83
35
30
25 23.17
20 ABC ANALYSIS
15
10
0
A B C
Interpretation:
A-items are goods which annual consumption value is the highest. The top 70-
80% of the annual consumption value of the company typically accounts for only 10-
20% of total inventory items. The company has 40.34% of “A” category products which
needs an enormous control.
C-items are, on the contrary, items with the lowest consumption value. The lower
5% of the annual consumption value typically accounts for 50% of total inventory items.
Here the company has34.83% of “C” category items which are low in consumption.
B-items are the interclass items, with a medium consumption value. That 15-25%
of annual consumption value typically accounts for 30% of total inventory items.
Through this categorization, the supply manager can identify inventory hot spots, and
separate them from the rest of the items, especially those that are numerous but not
that profitable.
EOQ
1. Material code 2608135

Annual Requirements = 24000 units
Cost of materials =Rs. 11.40
Cost of placing and receiving order = Rs.50
Annual carrying Cost of Inventory 10% of inventory value
EOQ =√ (2*24000*50)/(11.40*0.1)
=1450 units

EOQ =√ (2*84000*50)/ (10.80*0.08)

=3118 units

EOQ =√ (2*4800*12)/(16.81*0.2)
= 185 units

EOQ =√ (2*3000*10)/(14.52*0.1)
= 203units

EOQ =√ (2*9000*10)/(14.51*0.1)
= 352 units

EOQ =√ (2*24000*150)/(9.80*0.3)
= 1564 units
EOQ =√ (2*12001*50)/(10.93*0.08) = 185 units

EOQ =√ (2*9600*50)/(13.08*0.1)
= 856 units

EOQ =√ (2*9600*50)/(17.02*0.08)
= 839 units

EOQ =√ (2*9000*12)/(11.04*0.02)
= 312 units
S.NO Material Material New Monthly EOQ

Code Description Rate Requirement
1 2608135 Steel Ball 11.40 2001 1450
2 2657842 Bearing brush 10.80 7000 3118
3 2606582 Carbon Brush 16.81 400 185
4 2565173 Cover 14.52 250 203

assembly
5 2606967 Limit Switch 14.51 750 352
6 2671583 Link end 9.80 2001 1564

assembly
7 2766194 Wiping System 10.93 1000 1171
8 2867229 Gear boxing 13.08 800 856
9 2710654 Ball bearing 17.02 750 839
10 2618402 Magnet 11.04 750 312

3500
3118
3000
2500
2000
1564 S.NO
1450
1500 1171 EOQ
856 839
1000
500 352 312

185 203
0
1 2 3 4 5 6 7 8 9 10
INTERPRETATION
Above table represents the EOQ of each product for 1 month some of the
products, the quantity size is not mention EOQ. This indicates that the sale of the
product is very low. Therefore, the order is placed when it is needed.
FINDINGS
 Research Findings:
The study of inventory management at Alloysys Extrusion is conducted to know

the various techniques followed by company to control the inventory management of the
company.
 In the company the total inventory conversion period for the year 2018
which is 208 days
 Inventory turnover ratio in the year 2016 (7.95 times) is high.
 Raw material turnover ratio is lowest in 2018 since last five years i.e.
30 times,
 Work in process turnover ratio is very high in 2018 which is 224 times.
 Finished goods turnover ratio is very high in 2014 which is 42 times
 In ABC analysis, the A Category constitutes more than 70% of total
investment made in the raw materials. B and C category is not fairly large
investment in this category is than 30% and which warrant the minimum
attention.
 The EOQ of each product for 1 month indicates that the sale of the
product is very low. So, the company should place the order whenever it is
needed.
SUGGESTIONS
a) From the findings it is came to know that in the year 2018 the number of
days for holding Raw material is more, it is not good for the company
because it eats unnecessary investment. To avoid this problem the following
points will help.
 Purchase Raw Materials at the time when the stock reaches the minimum
level.
 The purchases should not cross the Maximum limit otherwise the stock kept
in stores idle.
 Quantity should be ordered as per the demand. We can assume the
demand for the goods from past experience.
 We can have more Raw materials which are imported from other countries
but carry reasonable stocks which are available locally.
b) If we purchase less quantity of materials at a time it will reduce the carrying
cost but increases the ordering cost and vise versa. Therefore optimum
ordering quantity is necessary, which minimizes the cost.
c) The company should maintain a safety level and also reordering point so
that they come to know at what time they should order for the supply of
material and need not to suffer from short fall of required material.
CONCLUSION
 Raw Material Conversion Period for the company is increased by 6 days in 2018
as compared to previous year is not a good sign.
 Finished Goods Conversion Period in 2018 is highest which 182 days which has
increased by 55 days as compared to previous year should be reduced.
 Since its beginning the company has to incur loss due to damage of machine E-
501 and due to which they had loss of production. So they have to keep this
machine in stock.
 Most of the employees in the organization are not aware about how to use SAP
software. The inventory should be fast moving so that warehouse cost can be
reduced.
 The finished goods have to be dispatched in feasible time as soon as

manufacturing is completed. Optimum order quantity should be maintained,
hence cost can be minimized.
Inventory control in an organization coordinates the purchasing, manufacturing and
distribution functions to meet the marketing needs and ensures that organizations
performance is in line with the set objectives and centers on customer satisfaction
.Inventory management challenges interfere with a company’s profits and customer
service. They cost an organization more money and lead to an excess of inventory
overstock that is difficult to move. Inventory management is one of the important key
activities of any organization. It is important in logistics planning and control,
production process, purchasing and satisfaction of customer’s services all of which are
important in organizational performance. Inventory management helps organizations to
meet higher than expected demand. This helps the organization to protect against
running out of inventory.

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A STUDY ON INVENTORY CONTROL TECHNIQUES

WITH REFERENCE TO ALLOYSYS EXTRUSION

Master of Business Administration

Register No: 37410150

SCHOOL OF MANAGEMENT STUDIES

SCHOOL OF MANAGEMENT STUDIES

Dr. UMAMAHESWARI, MBA, M Phil, Ph.D

Dr. BHUVANESWARI G., MBA., Ph.D.

Submitted for Viva voce Examination held on_____________________

Internal Examiner External

I am pleased to acknowledge my sincere thanks to Board of Management

I convey my thanks to DR.BHUVANESHWARI G., MBA.,PH.D Dean,

I would l like to express my science and deep sense of gratitude to my

I wish to express my thanks to all Teaching and Non-teaching staffs

CHAPTER NO. CONTENTS PAGE NO.

LIST OF CHARTS iii

1.1 Introduction about the study

1.2 Industry profile

1.3 Company profile

2.1 Review of Literature

3.1Need for study

3.2 Scope of the study

3.3 Objectives of the study

3.4 Research of Design

3.5 Sources of Data

TABLE NO. PARTICULARS PAGE NO.

CHART NO. PARTICULARS PAGE NO.

Stock administration is the "stream's administration of materials into an association to

1.1 Introduction about the study

The term ‘inventory’ can be defined as,

Inventory includes the following categories of items:

Semi-finished products found at various stages in the production operation.

c. Finished goods Inventories:

Completed products ready for shipment.

Process of Inventory Management and Control

a. Determination of optimum inventory levels and procedures of their review and

c. Planning and design of the Inventory control system:

An inventory system provides the organizational structure and the operating

d. Planning of the Inventory control organization:

It is yet another important aspect of inventory management because choosing

INVENTORY CONTROL TECHNIQUES

Inventory control techniques are employed by the inventory control organization

Several techniques of inventory control are in use and it depends on the

ABC analysis is a business term used to define an inventory categorization

4. On issue of materials, tight control on A class, Moderate control on B class, Loose

High, Medium and Low Classification:

Procurement department is more concerned with prices of materials so this

Some of the other objective can be as under

Helps in taking the decision such as whether to procure in exact requirement or

When it is desired to evolve purchasing policies then also HML analysis is

When the objective is to keep control overconsumption at the department level

ECONOMIC ORDER QUANTITY(EOQ):

Components of the EOQ Formula:

D: Annual Quantity Demanded

Q: Volume per Order

S: Ordering Cost (Fixed Cost)

C: Unit Cost (Variable Cost)

H: Holding Cost (Variable Cost)

i : Carrying Cost (Interest Rate)

It is relevant to keep in mind that even though accuracy is crucial, small

The cost of holding inventories are as follows:

This include the cost of purchasing the goods, transportation and

Movement inventories are also called transit or pipeline inventories.