A STUDY ON INVENTORY MANAGEMENT WITH REFERENCE TO MAGNA MODULES AND SYSTEMS

PRASANNA VENKATESH.N

NEED FOR THE STUDY

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

OBJECTIVES OF THE STUDY

To evaluate inventory using a suitable control technique. To classify the various components based on its value and quantities. To optimize the usage of inventory.

SCOPE OF THE STUDY

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

REVIEW OF LITERATURE
Jon Schreibfeder,1992 ,He said that it is easy to turn cash into inventory, the challenge is to turn inventory back into cash. In early 1990s many distributor recognize that they needed help controlling and managing their largest asset inventory. In response to this need several companies developed comprehensive inventory management modules and systems. These new package include many new features designed to help distributors effectively managed warehouse stock. But after implementing this many distributors do not feel that they have gained control of their inventory. Wolf Bagby, 1996,Managing inventory ,In this study Mr. W.Bagby explains that by managing the inventory it becomes easier for the organization to meet the profit goals, shorter the cash cycle, avoid inventory shortage, avoid excessive carrying costs for unused inventory, and improve profitability by decreasing cash conversion and adopt JIT system. According to this study companies need to get smart about inventory. Boosting financial performance is another benefit that comes from better inventory management. Infect large number of manufacturers enjoy savings and better performance by choosing the approach of inventory reduction.For this company needs to maximize the cash flow and profitability and this includes keeping a watchful discerning eye on charge in supply and demand.

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

LIMITATION OF THE STUDY

The data are collected from the period of 2011-2013 and time taken for the period of project is January 2013 to April 2013. Due to time constraints tool used for controlling inventories is ABC (Always Better Control) analysis.

ABC ANALYSIS FOR FOUR YEARS

YEAR
Class A B

2009-2010
Quantity 7468 9481 Value 6034840 2877407

2010-2011
Quantity 9057 10615 Value 7335361 3080490

2011-2012
Quantity 7620 9674 Value 6200452 2938453

2012-2013 Quantity 14204 18066 Value 11501570 4941999

C
Grand Total

27516
44465

611112
9523360

30452
50124

662845
11078696

28078
45372

636605
9775510

64236
96506

1366233
17809802

OVER ALL PERCENTAGE OF ABC ANALYSIS FOR FOUR YEARS

YEAR Class A B C Grand Total 2009-2010 Quantity 17% 21% 62% 100% Value 63% 31% 6% 100% 2010-2011 Quantity 18% 21% 61% 100% Value 66% 28% 6% 100% 2011-2012 Quantity Value 2012-2013 Quantity 18% 21% 61% 100% Value 65% 28% 8% 100%

18% 63% 21% 30% 61% 7% 100% 100%

ABC ANALYSIS FOUR YEARS QUANTITY

ABC ANALYSIS FOR THREE YEARS VALUES

70% 60% 50% 40% 30% 20% 10% 0% A 2009-2010 2010-2011 B 2011-2012 C 2012-2013

70% 60% 50% 40%

30%
20% 10% 0% A 2009-2010 2010-2011 B 2011-2012 C 2012-2013

FINDINGS
In the year of 2012-13, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C. In the year of 2012-13, under the class A products value constitutes 65%, 28% value of product falls under the class B, 8% value of product falls under the Category C. In the year of 2011-12, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C. In the year of 2011-12, under the class A products value constitutes 63%, 30% value of product falls under the class B, 7% value of product falls under the Category C. In the year of 2010-11, under the class A products quantity constitutes 18%, 21% quantity of product falls under the class B, 61% quantity of product falls under the Category C. In the year of 2010-11, under the class A products value constitutes 65%, 28% value of product falls under the class B, 8% value of product falls under the Category C. In the year of 2009-10, under the class A products quantity constitutes 17%, 21% quantity of product falls under the class B, 62% quantity of product falls under the Category C. In the year of 2009-10, under the class A products value constitutes 63%, 31% value of product falls under the class B, 6% value of product falls under the Category C.

SUGGESTIONS
It is required to have close observation of the Class A materials, since the materials constitutes about 65 percentage of the total value of inventory. The inventory can be controlled on basis of the classification to ensure the optimum utilization of inventory. It is suggested to have a proper system to analyze and review the inventory in a periodical basis.

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