A

PROJECT REPORT
ON
“A STUDY OF INVENTORY MANAGEMENT BY
USING ABC ANALYSIS”
AT
JYOTI TELECOM (NASHIK)
SUBMITTED BY,

MR. AVINASH VIJAY PATIL

(OPERATIONS MANAGEMENT)

UNDER THE GUIDANCE OF

PROF. ANKUSH PINGALE

DR. MOONJE INSTITUTE OF MANAGEMENT & COMPUTER

STUDIES, NASHIK
(APPROVED BY AICTE NEW DELHI AND AFFILATED TO
SAVITRIBAI PHULE PUNE UNIVERSITY)
ACADEMIC YEAR 2019-20
Central Hindu Military Education Society’s

Dr . Moonje Instit ut e of Management &

Comput er St udies
(Affiliated to Savitribai Phule Pune University, Pune & Approved by AICTE New Delhi)
Bhonsala Military College Campus, Rambhoomi, Nashik-422005
Ph. (0253)2309617/2342840 E-mail: [email protected] / [email protected]
URL- www.moonjeinstitute.com, www.dmi.bhonsala.in

CERTIFICATE
This is to certify that, Mr. Avinash Vijay Patil
has satisfactorily completed his/her Summer Internship
Project on the topic “A Study of Inventory management
using ABC analysis” in the organization Jyoti Telecom as
a partial fulfillment for the requirement of MBA degree
during A.Y.2019-20.

Project Guide H.O.D Director

Examiner/s 1. _ 2.
DECLARATION

I hereby declared that project entitled “A Study of Inventory management

using ABC analysis ,at Jyoti Telecom,Nashik ”. is a bonafied and authentic
record of work done by me under the supervision of Prof. Ankush Pingale during
academic year 2019-20.
The work presented here is not duplicated from any other source & also not
submitted earlier for any other degree/diploma to any university.
I understand that any such duplication is liable to be punished in accordance with
the university rules.

Place: Nashik Mr. Avinash V. Patil

Signature of student
ACKNOWLEGEMENT

It is my profound privilege to acknowledge with deep sense of gratitude

and indebtness towards my project guide Prof.Ankush Pingale at Dr.
Moonje institute of management and computeer studies, Nashik for him
valuable guidance.
My sincere thanks to Mr. Arun Avhad( Director) for giving me a chance to
do project at Jyoti Telecom,Nashik for his extensive co-operation and
support.
My special thanks to staff members of Jyoti Telecom who helped me during
this project work. I am also thankful to the management of Jyoti Telecom
who has given their full co-operation in this study.

Avinash V. Patil
INDEX
CHAPTER TOPIC PAGE
NO NO
1 INTRODUCTION
1.1 Introduction of Project 1
1.2 Need to hold inventories 12
1.3 Objective of the study 13
1.4 Scope of the study 13
1.5 Limitation of study 13

2 COMPANY PROFILE 14
2.1 Name of industry, Vision, Mission

3 LITERATURE REVIEW 19

4 RESEARCH METHODOLOGY AND 21

DATA COLLECTION

5 DATA ANALYSIS 23

6 FINDINGS AND SUGGESTIONS 40

7 CONCLUSION 41

8 BOBLIOGRAPHY / REFERENCES 42
LIST OF TABLES

FIGURE PAGE NO.

PARTICULARS
NO

2.1 Factsheet 10
5.1 ABC Analysis 19
5.2 Components distribution as ABC Analysis
21
5.3 Total amount of raw material
21
5.4 Distribution of components as ABC Analysis in
24
year 2016
5.5
Requirement of units for ECB in 216 24
5.6
Distribution of components as ABC Analysis in 26
year 2017
5.7
Requirement of units for ECB in 2017 26
5.8
Distribution of components as ABC Analysis in 29
year 2018
5.9
Requirement of units for ECB in 2018 29
5.10
Distribution of components as ABC Analysis in 32
year 2019
5.11
Requirement of units for ECB in 2019 33
5.12
Total no. of annual cost 35
LIST OF GRAPHS

GRAPH PAGE NO.

PARTICULARS
NO

5.1 Total amount of raw material 22

5.2 Total no. of annual cost 35

LIST OF FIGURES

FIGURE PAGE NO.

PARTICULARS
NO

2.1 Industry: Jyoti telecom 9

CHAPTER 1
INTRODUCTION

1.1 INTRODUCTION OF THE PROJECT

Inventory Management is concerned with the duties of the finical

manager in the business firm. Financial managers actively manage the
financial affairs of any type of business, namely financial and non-
financial, private and public, large and small, profit seeking and non-
profit. They perform such varied task, as budgeting, financial
forecasting, cash management, credit administration, investment
analysis, funds management and inventory management.
A term inventory refers to the stock file of the products a firm is
offering for sale and the components that make up the product. In
other words, inventory is composed of assets that will be showed in
future in the normal course of the business operations. The assets
which firms store as inventory in anticipation of need are:
1. Raw materials
2. Work in process
3. Finished goods
The raw material inventory contains item that are purchased by the
firm from other and are converted into finished goods through the
manufacturing (production) process. They are an important input of
the final product. The working process inventory consists of items
currently being used in the production process.
They are normally semi finished goods that are at various stages of
production in a multi stage production process. A finished goods
represented final or completed products which are available for sale
.The inventory of such goods consists of items that have been
produced but are yet be sold.
Inventory, as a current asset, differs from other current assets because
only financial managers are not involved. Rather all the functional
areas, finance, marketing, production, and purchasing are involved.
The views concerning the appropriate The job of the financial manger
is to reconcile the conflicting view points of the various functional
areas regarding the maximizing the owners wealth. Thus, inventory
management, like the management of other current assets , should be
related to the overall objective of the firm. It is in this context that the
present chapter is devoted to the main elements of inventory
management from the view point of financial management.
level of inventory would differ among the different functional areas.
The objective of inventory management is explained in some detail
sections. Section two is concerned with inventory management
techniques. Attention is given here to basic concepts relevant to the
management and control of inventory.
As a matter of fact, the inventory management techniques are a part
of production management. But a familiarity with them is of great help
to the financial managers in planning and budgeting inventory.

1.1.1 INVENTORY MANAGEMENT INVOLVES:

1. Inventory management is the active control program which allows the
management of sales purchases and payment.
2. System and processes that identify inventory requirements, set targets,
provide replenishment techniques and report actual and projected
inventory status.
3. Inventory management helps providing a good understanding ground
and the capacity to control financial costs.
4. The Inventory management will control operating costs and provide
better understanding.

1.1.2 MEANING OF INVENTORY

Inventory is a list for goods and materials, or those goods and materials
themselves, held available in stock by a business. It is also used for a list of
the contents of a household and for a list for testamentary purpose of the
possessions of someone who has died. In accounting inventory is considered
an asset.

1.1.3 CLASSIFICATION OF INVENTORIES

Inventories play a major role in a business or depending on nature of the
businesses. The inventories may be classified as under.
1. Raw Materials
Materials and components scheduled for use in making a product. These are
the basic inputs, which are converted into finished products through
manufacturing process. Raw material inventories are those units, which have
been purchased and stored for future production.
2. Work in process / Progress
Materials and components that have begun their transformation to finished
goods. 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.
3. Finished Goods
A finished goods is a completed part that is ready for a customer order. These
goods have been inspected and have passed final inspection requirements so
that they can be transferred out of work-in-process and into finished goods
inventory. From this point, finished goods can be sold directly to their final
user, sold to retailers, sold to wholesalers, sent to distribution centers, or held
in anticipation of a customer order.

1.1.4 BASIC REASONS TO KEEPING AN INVENTORY

There are three basic reasons for keeping an inventory:
1. TIME: The time lags present in the supply chain, from supplier to user
at every stage, requires that you maintain certain amount of inventory
to use in this “lead time”.
2. UNCERTAINTY: Inventories are maintained as buffers to meet
uncertainties in demand, supply and movement of goods.
3. ECONOMIES OF SCALE: Ideal condition of “one unit at a time at a
place where user needs it, when he needs it “principle tends to incur
lots of costs in terms of logistics. So bulk buying, movement and
storing brings.
Inventory management involves:
1. Inventory management is the active control program which allows the
management of sales purchases and payment.
2. System and processes that identify inventory requirements, set targets,
provide replenishment techniques and report actual and projected
inventory status.
3. Inventory management helps providing a good understanding ground
and the capacity to control financial costs.
4. The Inventory management will control operating costs and provide
better understanding.
1.1.5 ESSENTIALS OF INVENTORY CONTROL
The important requirements of inventory control are:
1. A firm needs inventory control system to effectively manage its
inventory.
2. Proper classification of materials with codes, material standardization
and simplification.

3. The operation of a system of internal check to ensure that all

transactions involving material and equipment are checked by properly
authorized and independent persons.
4. The operation of a system of perpetual inventory so that it is possible to
determine at any time, the amount and value of each kind o material in
stock.
5. A suitable method of valuation of materials is essential because it
affects the cost of jobs and the value of closing stock of materials.

The various departments plays their important roles, these departments are
depends on each other;
1. Receiving and Inspection Department
 Receiving all raw materials and other supplies from various suppliers.
 Verify items by count, weight etc., and report any shortage
 Inspect materials and supplied as to quality by analyzing them suitably.
 Inform the purchasing department and accounts department all facts that may
require adjustment with vendor.
 Analyze and give them the code depending up on the type of materials.
2. Stores keeping Department
 Check and accept all materials form the received department.
 Identity each material received with the stock list, check the code number and
place in the respective bins.
 Issue materials and supplies for use upon presentation of authorized
requirement.
 Record quantities received and issued on bin lards or stock ledger cards
consisting the perpetual inventory records.

3. Production Department
 Make out materials requirement note i.e. requisition of requisite quantity and
quality of materials at the right moment so the all materials may be available
without delay on production.
 Check and verify that the materials of requisite quantity and quality have been
received and charged to production.
 Keep proper records or materials received and their progress through different
operations or progress.
 Prepare materials return note for excess materials.
 Prepare materials transfer note to cover any transfer of materials.
 Prepare report on scrap for reporting to management.

4. Inventory Control Department

 In may be a subdivision of the cost accounting department, although in many
concerns, it is a part of the stores keeping department.
 It keeps perpetual inventory records.
 Adjust the stock on receipt of the property authorized adjustment notes.
 Prepare weekly or monthly, statement of receipts, issue, balance and average
consumption of materials both in terms of quantity and value.
1.2 NEED TO HOLD INVENTORIES

TRANSACTION MOTIVE:
This refers to the need of maintaining inventory to facilitate smooth
production and sales operations.
PRECAUTIONARY MOTIVE:
Precautionary motive for holding inventory is to provide a safeguard when
then actual level of activity is differ than anticipated. This inventory serves
when there is a unpredictable changes in the demand and supply forces.
SPECULATIVE MOTIVE:
This motive influences the decision to increase or decrease the levels of
inventory to take the advantage of price fluctuations.
1.3 OBJECTIVES OF STUDY
1. To study the inventory management process.
2. To analyze the ABC analysis.
3. To find the Economic Order Quantity for the selected raw material.

1.4 SCOPE OF THE STUDY

1. Inventory management is a simple concept-don’t have too much stock
and don’t have too little.
2. Since there can be a substantial costs involved in staying above and
below the optimal range, careful inventory management can make a
huge difference in the right balance can be quite a complex and time
consuming task without the right technology.
3. It enables the business to meet or exceed expectations of the customers
by making the products readily available.
4. The scope of the study includes the ABC Analysis of Raw Materials,
work in progress and finished goods for four financial years.
5. This study provides insight to the management of high value items and
also brings attention of management towards movement of ‘A’ class
items over period of 4 years.

1.5 LIMITATIONS OF THE STUDY

1. Detail study about all the material was not possible because of time
limit.
2. Some of the information was kept confidential by the stories
department.
3. Study was confined only to the selected components in the stores
department.
CHAPTER 2
COMPANY PROFILE

2.1 Name of industry: Jyoti Telecom

Fig.2.1 Industry: Jyoti telecom

Established in the year 2000, we 'Jyoti Telecom', are recognized as one of the
leading Manufacturers and Suppliers of an impeccable array of Wireless Security
System. These are manufactured using optimum quality of components and other
material, which we source from reputed vendors of the market. We use advanced
technologies to manufacture the wide range of our products at par with set
industry guidelines. The products we offer to the clients are known for optimum
performance, excellent battery backup, and accurate functioning.
Ours is a client-centric organization that pay utmost respect to esteem clients. We
provide only flawless products by testing the quality of our products on various
stages. To meet the high demands of our clients, we offer our products at
competitive prices. Our firm also provide customized solution and design the
products as per the requirements of the valued clients. We focus on timely
delivery of consignments using our widely expanded distribution network via
road. Apart from this, we also accept payments through easy modes such as Cash,
Cheque, DD and Credit Card.
Under the valuable guidance of our mentor, 'Mr. Arun N. Avhad', we have been
able to create a niche for ourselves in this competitive market. His vast
knowledge, constant motivation and business & management skills have enabled
us to gain the trust and confidence of the valued clients. We are looking queries
from Nashik, Maharashtra.
Specialize in,
1. Highway SOS emergency call box
2. Wireless GSM security system
3. Wireless GSM fire alarm system
4. Server room temperature and humidity monitoring system
5. Various types digital, industrial timers
6. GSM Auto dialer
7. Current controlled devices
8. Building automation system
9. GSM Based motor starter
FACTSHEET
Nature of business Manufacturer
Additional business 1. Exporter
2. Service provider
3. Importer
Company CEO Mr. Arun N. Avhad
Company address Plot.no.IT 21,IT park,MIDC
Ambad,Nashik,422010,Maharashtra,India
Industry Manufacturing, Services and Trading of
security systems and embedded software
product design
Total no. of employees Upto 10 people
Tear of establishment 2000
Legal status of firm Individual
Promoter Mr.Arun N. Avhad
Annual Turnover Upto 1.5 Crore
No.of technical persons 5-7
Table.2.1 Factsheet

VISION
 To become a Brand of choice
 Employer of choice
 Business Partner of choice

MISSION
“Serving the most valued, safe and user friendly products to the society, making
it a peaceful place to dwell.”
Innovation:
“We are in constant process to think in an INNOVATIVE way to go further with
our products. We look forward for a hand shake on a technology transfer which
makes us an IMPROVED PERSONNEL.”

OUR TEAM
We are blessed with a highly qualified team of professionals at our organization.
These professionals are masters of their respective domain and work in
close-consort among themselves to enhance the total productivity and timely
completion of tasks. Apart from this, we recruit these professionals after
testing their ability on number of recruitment tests and interviews. The
professionals appointed by us work in coordination with clients in order to
understand their exact requirements and fulfill them in the best possible
manner.
Our workforce encompasses of the following:
 Technocrats
 Engineers
 Quality auditors
 Warehousing & packaging personnel

Why Us?
Owing to the transparent and ethical business policies, we have been able to
create a niche for ourselves in the competitive market. We provide only flawless
products to the clients by testing them on various stages to ensure their optimum
quality. To meet the varied demands of clients, we offer facility of customization.
Following are some of the other factors which help us to stand a step ahead
of our competitors:
 Easy payment modes
 Customize solution
 Quality assurance
 Timely delivery
 Market reputation

MAJOR MARKETS
 UAE
 Tyban
 China, Qatar, Maldives, etc.
CHAPTER 3
LITERATURE REVIEW

Inventory management was first invented by Adam. Before the industrial

revolution, merchants basically had to write down all of the products they sold
every day. Then they had to order more products based on their hand-written
notes and their gut feelings. this was an incredibly inefficient and inaccurate way
of doing bussiness.
Merchants couldn’t really account for stolen goods unless they did time
consuming physical counts on a regular basis.they also had trouble making sure
they got the right number of products when orders came in because of sparse
recordkeeping.but it was the best they could do.
In the 1960s,a group of retailers got together and came up with a new method for
tracking inventory: the modern barcode.there were several competing types of
barcodes before they were standardized with the universal product code in
1974.Its still the most used barcode in the united states today.
As computers become more efficient and cheaper, UPCs grew in popularity. In
the mid 1990s, companies started experimenting with inventory management
software that would record data as products were scanned in and out of
warehouses. The technology evolved into a comprehensive inventory
management solution by the early 2000s.

Nowadays, the capabilities of applications vary, most inventory management

applications give organizations a structured method of accounting for all
incoming and outgoing inventory within their facilities. Organizations save a
significant amount in costs associated with manual inventory counts,
administrative errors and reductions in inventory stock outs.
This paper aims to provide a synthetic review of the literature on the
Inventory Management. Review of literature justifies the reason for our
research.It demonstrates a brief elaboration of prior studies on inventory
management. Prior research will help us to ensure that we have included all of
our major relevant constructs in our study. It talks about the knowledge of
inventory management which allows us to identify the gap which our research
could fill and also strength’s the topic that we chose for our research.
The literature review will help us to find and select appropriate methods of
inventory management. The literature review is needed because it is a necessary
skill both for researchers and for practitioners of a profession which claims to be
founded on a knowledge base and also to locate and summarize the findings of
research on a given topic.To understand the challenges and problems of a
business organizations. To become able to apply theoretical knowledge obtained
at the institute in a practical manner in the actual business environment.
CHAPTER 4
RESEARCH METHODOLOGY AND DATA
COLLECTION

4.1 RESEARCH METHODOLOGY

Research is the activity on the basis of which investigation can be done &
problems can be solved & decisions can be made. Analysis of data should be
done scientifically frame work within which the research activities are carried is
called Research Methodology.
There are two reasons for which research is done:
1.To find solution for the problem
2.To take decision
For Research there are different ways but for this project I collect the data in two
ways:
4.1.1 Primary Data
4.1.2 Secondary Data
4.1.1 Primary Data:
Primary Data is the data which is not readily available. The primary data is
collected by, interviewing method and observation. This data one has to collect
on his own.With the help of the Primary Data I collected the information about
the “INVENTORY” with the help of work in store, purchase department and
Production department.
Following are the information related to this data:
4.1.1.1 Observation Method:
observation method is of two types: participative and non- participative. I used
non-participative method to know the Operation of the company, working of the
store, maintenance, production department, etc.
4.1.2 Secondary Data:
Secondary Data is the data that has been collected earlier for the some purpose
other than purpose of present study. This data is useful for the reference of the
project. Secondary data is readily available.
With the help of secondary data I collected information about the Annual report
of Jyoti Telecom, from 2016-19 for how it is related with the primary data. And
Brief idea about the Role of Treasury has been taken.
I would like to thanks to whole staff of the Jyoti Telecom, Nashik for giving
information about the data what I required for my project.The methodology of
this study has been adopted on the following basis: Study of various Journals,
Notes & Books.

4.2 DATA COLLECTION

The data gathering and measuring information for Inventory management is
doing in industry which are select for summer internship program.
The data is collecting at the time of actual work on material management. Some
important data is collecting from internet which are helpful for material
management.
The main data collection methods are:
4.2.1.Direct observations:
Making direct measurements is the most accurate method for many variables,
such as catch, but is often expensive. Many methods, such as observer programs,
are limited to industrial fisheries.

4.2.2 Reporting:
The main alternative to making direct measurements is to require fishers and
others to report their activities. Reporting requires literacy and co-operation, but
can be backed up by a legal requirement and direct measurements.
CHAPTER 5
DATA ANALYSIS

5.1 INVENTORY MANAGEMENT PROCESS:

Inventory Management is concerned with the duties of the finical
manager in the business firm. Financial managers actively manage the
financial affairs of any type of business, namely financial and non-
financial, private and public, large and small, profit seeking and non-
profit. They perform such varied task, as budgeting, financial
forecasting, cash management, credit administration, investment
analysis, funds management and inventory management.
A term inventory refers to the stock file of the products a firm is
offering for sale and the components that make up the product. In
other words, inventory is composed of assets that will be showed in
future in the normal course of the business operations.

5.2 ABC ANALYSIS:

ABC analysis classifies various inventory into three sets or groups of priority
the allocates managerial efforts in proportion of the priority the most
important item are classified into class - A, Those of intermediate importance
are classified as “class - B’’ and remaining items are classified into class - C’.
The financial manager has to monitor the items belonging to monitor the items
belonging to different groups in that order of priority and depending upon the
consumptions.
For material control purpose, the materials may be divided in different
categories. In case of manufacturing concerns, it is observed that sometimes
a small percentage of quantity of items comprises of high value and other
times large quantity of material comprises of lesser value. Also there may
exists some moderate situation.
The items with the highest values is given priority and soon and are more
controlled then low value item. The re - rational limits are as follows.

CATEGORY % OF ITEMS %OF TOTAL COST

OF MATERIAL
A 5-10 70-85
B 10-20 10-20
C 70-75 5-10
Table:5.1 ABC Analysis

Procedure:
1.Items with the highest value is given top priority and soon.
2.There after cumulative totals of annual value consumption are Expressed as
percentage of total value of consumption.
3.Then these percentage values are divided into three categories.
ABC analysis helps in allocating managerial efforts in proportion to
importance of various items of inventory.
Various electronics components used to manufacturing emergency call box
electronic board are as follow;
1. Resistors
2. Capacitors
3. Diodes
4. Zenar diodes
5. LEDs
6. Potentiometer
7. LM 317 IC
8. Heat sink
9. Screws, Nuts
10. Programming IC
11. Speaker
12. Mic
13. SIM Holder
14. Connectors
15. GSM Antenna
16. GSM Module(800,800C)
17. Calling LED
18. Transistor
19. Solar charge controller
20. VOIP Board
21. Battery
22. Magnets
23. Connecting wires
24. .Printed circuit board(PCB)
This components are distributed with the help of ABC analysis inventory
management technique,
A B C
GSM Module Resistors Connectors
800/800C
Printed circuit board Capacitors Light emitting diodes(LED)
LM 317 IC Diodes Connecting wires
GSM Antenna Zenar diodes Heat sink
Speaker Potentiometer Screw,Nuts
Mic Transistors SIM Holder
Programming IC
Solar charge
controller
VOIP Fiber Optic
Board
Table:5.2 Components distribution as ABC Analysis

ABC Analysis
Raw Material (at closing stock) as per last four year data;

YEAR TOTAL NO. OF RAW MATERIAL

2016 75000
2017 123596
2018 106066
2019 184661

Table:5.3 Total amount of raw material

TOTAL.NO.OF RAW MATERIAL
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
2016 2017 2018 2019

Graph:5.1 Total amount of raw material

Interpretation:
From the above graph and table it shows that, the closing stock of raw
material in year 2019 is increased as compare to others. The closing stock
of the year 2019 is 184661.in the year 2019 the production is increased.
5.3 ECONOMIC ORDER QUANTITY
EOQ applies only when demand for a product is constant over the year and
each new order is delivered in full when inventory reaches zero. There is a
fixed cost for each order placed, regardless of the number of units ordered.
There is also a cost for each unit held in storage, commonly known as holding
cost, sometimes expressed as a percentage of the purchase cost of the item.
We want to determine the optimal number of units to order so that we minimize
the total cost associated with the purchase, delivery and storage of the product.
The required parameters to the solution are the total demand for the year, the
purchase cost for each item, the fixed cost to place the order and the storage
cost for each item per year. Note that the number of times an order is placed
will also affect the total cost, though this number can be determined from the
other parameters.
EOQ is the acronym for economic order quantity. The economic order quantity
is the optimum quantity of an item to be purchased at one time in order to
minimize the combined annual costs of ordering and carrying the item
in inventory.EOQ is also referred to as the optimum lot size.
There are various variables are used in economic order quantity,
A = Total Annual units
O = Ordering cost
C = Carrying cost
Q = Order quantity
P = Purchase unit price

The mathematical formula to find the economic order quantity is,

EOQ = √2AO/C
Where,
EOQ = Economic order quantity
A =Total units required
O = Ordering cost
C = Carrying cost
The calculations of amount of finished goods of the year 2016,2017,2018 and
2019 are as given below with graphical representation;

5.3.1 EOQ During 2016: as per the requirement of ECB

A B C
GSM Module 800 Resistors Connectors
Printed circuit board Capacitors Light emitting diodes(LED)
LM 317 IC Diodes Connecting wires
GSM Antenna Zenar diodes Heat sink
Speaker Potentiometer Screw,Nuts
Mic Transistors SIM Holder
Programming IC
Table:5.4 Distribution of components as ABC Analysis
In 2016,the components of ECB are distributed with the help of ABC
Analysis Technique

PARTICULARS

ECB 75000
Ordering cost per order Rs. 2000

Carrying cost 10%

Purchase price per unit 400

Table:5.5 Requirement of units for ECB

The firm requires above given units of material for manufacturing of
emergency call box . The following are the details of their operation during
2016.
Calculation of EOQ:-
Total units required (A) =75000
The ordering cost per order (O) = Rs.2000
Carrying cost per unit (C) = 10%
(i.e.) 10% of Rs.400 =Rs.40
EOQ = √2AO/C
=2*75000* 2000/40
=Rs.8660.25
1.Number of orders for the year = A/EOQ
=75000/8660.25
=8.66~9orders
2.Total annual cost = carrying cost + ordering cost
= 1445000+ 34000
= Rs.1479000
Where,
Carrying cost = order size* average inventory
order size = A/no of orders
=75000/9
= 8333.33

Average inventory = order size/2

=8333.33/2
= Rs.4166.66
Carrying cost = 8333*4166.66
= Rs.347221
Ordering cost = cost per order * no of orders
= 2000*9
=Rs.18000
5.3.2 EOQ During 2017 as per the requirement of ECB
A B C
GSM Module 800C Resistors Connectors
Printed circuit board Capacitors Light emitting diodes(LED)
LM 317 IC Diodes Connecting wires
GSM Antenna Zenar diodes Heat sink
Speaker Potentiometer Screw,Nuts
Mic Transistors SIM Holder
Programming IC
Table:5.6 Distribution of components as ABC Analysis in year 2017

In 2017,the components of ECB are distributed with the help of ABC

Analysis Technique.In 2017,Some components are changed by Research
and development department,GSM Module 800C are used in 2017 at the
place of GSM module 800.

PARTICULARS
ECB 123596
Ordering cost per order 2200
Carrying cost 10%
Purchase price per unit Rs 420
Table:5.7 Requirement of units for ECB

The firm requires abow given units of material for manufacturing of ECB. The
following are the details of their operation during 2017.
Calculation of EOQ:-
Total units required (A) =123596
The ordering cost per order (O) = Rs.2200
Carrying cost per unit (C) = 10%
(i.e.) 10% of Rs.2000 =Rs.42

EOQ = √2AO/C
=2*123596*2200/42
=Rs.3598.354

Number of orders for the year = A/EOQ

= 123596/3598.354
= 34.79~35orders

Total annual cost = carrying cost + ordering cost

= 6245669+ 77000
= Rs.6322669
Where,
Carrying cost = order size average inventory
order size = A/no of orders
= 123596/35
= 3531.31

Average inventory = order size/2

= 3531.1/2
= Rs.1768.655

Carrying cost = 3531.31*1768.655

= Rs.6245669

Ordering cost =cost per order no of orders

= 2200 *35
= Rs.77000
5.3.3 EOQ During 2018: as per the requirement of ECB

A B C
GSM Module 800C Resistors Connectors
Printed circuit board Capacitors Light emitting
diodes(LED)
LM 317 IC Diodes Connecting wires
GSM Antenna Zenar diodes Heat sink
Speaker Potentiometer Screw,Nuts
Mic Transistors SIM Holder
Solar Charge
Controllr
Table:5.8 Distribution of components as ABC Analysis in year 2018

In 2017,the components of ECB are distributed with the help of ABC

Analysis Technique.In year 2017,Some components are added to the ECB
and it is the development of ECB developed by Research and development
department, Additional solar charge controller are used in ECB in the
year of 2017.

PARTICULARS
ECB 106,066
Ordering cost per order Rs 2400
Carrying cost 10%
Purchase price per unit Rs 440
Table:5.9 Requirement of units for ECB
The firm requires abow given units of material for manufacturing of
emergency call box . The following are the details of their operation during
2016.
Calculation of EOQ:-
Total units required (A) =106066
The ordering cost per order (O) = Rs.2400
Carrying cost per unit (C) = 10%
(i.e.) 10% of Rs.2000
=Rs.44
EOQ =√2AO/C
=2 *106066* 2400/44
=Rs.3401.59
Number of orders for the year = A/EOQ
=106066/3401.59
=31.18~32orders

Total annual cost = carrying cost + ordering cost

= 5.493154+ 76800
= Rs.5569954
Where,
Carrying cost = order size * average inventory
Order size = A/no of orders
= 106066/33/2
= 3314.56
Average inventory = order size/2
= 3314.56/2
= Rs.1657.28
Carrying cost = 3314.56*1657.28
= Rs.5493154
Ordering cost = cost per order * no of orders
= 2400*32
= Rs.76800
5.3.4 EOQ During 2019: as per the requirement of ECB

A B C
GSM Module 800C Resistors Connectors
Printed circuit board Capacitors Light emitting
diodes(LED)
LM 317 IC Diodes Connecting wires
GSM Antenna Zenar diodes Heat sink
Speaker Potentiometer Screw,Nuts
Mic Transistors SIM Holder
Solar Charge
Controllr
VOIP Based Fiber
optic
Table:5.10 Distribution of components as ABC Analysis in year 2019

In 2019,the components of ECB are distributed with the help of ABC

Analysis Technique.In year 2019,Some components are added to the ECB
and it is the development of ECB developed by Research and development
department, Additional VOIP Based Fiber optic are used in ECB in the
year of 2017.
PARTICULARS
ECB 184,661
Ordering cost per order 3000
Carrying cost 12%
Purchase price per unit Rs 500
Table:5.11 Requirement of units for ECB

The firm requires abow given units of material for manufacturing of ECB.
The following are the details of their operation during 2019.

Calculation of EOQ:-
Total units required (A) =184,661
The ordering cost per
order (O) = Rs.3000
Carrying cost per unit (C)
= 12%
(i.e.) 12% of Rs.500 =Rs.50

EOQ = √2AO/C
= 2*184,661*3000/50
= Rs.4, 707.37
Total annual cost = Carrying cost + Ordering cost
= 11209639 + 117000
= 11,32,6639
Where,
Carrying cost = order size* average inventory
Order size = A/no of orders
= 184661/39
=4734.90
Average inventory = order size/2
= 4734.90/2
= Rs.2367.45

Carrying cost = 4734.90 *2367.45

= Rs.11209639
Ordering cost = cost per order* no of orders
= 3000* 39
= Rs.117000
5.4 Finished goods (at closing stock):-
YEAR TOTAL NO.OF ANNUAL COST
2016 1479000
2017 6322669
2018 5569954
2019 11,32,6639

Table:5.12 Total no. of annual cost

TOTAL NO. OF ANNUAL COST

12000000

10000000

8000000

6000000

4000000

2000000

0
2016 2017 2018 2019

Graph:5.2 Total no. of annual cost

Interpretation:
From the above graph and table it shows that, the total amount of Finished
goods of the year 2016-2019.2019 is increased as compare to others. The
amount of finished good of the year 2019 is 11,32,6639.in the year 2019 the
production is increased.
CHAPTER 6
FINDINGS AND SUGGESTIONS

1. The company is having good sales for their products during all the years
of the study.
2. The inventory turnover ratio is on a declining trend year after year in the
period of the study. It indicates inefficiency of management in turning
of their inventory into sales.
3. The company should adopt sophisticated techniques to manage its
inventory in a better manner.
4. The EOQ calculated is suggesting that the company should obtain its
inventory requirements by placing orders frequently to its suppliers
rather than one time replenishment.
5. Company should take measures for maintenance of proper stores and
spares so as to avoid the frequent breakdown of the machinery.
CHAPTER 7
CONCLUSION

Inventory management has to do with keeping accurate records of finished

goods that are ready for shipment. This often means posting the production
of newly completed goods to the inventory totals as well as subtracting the
most recent shipments of finished goods to buyers. When the company has a
return policy in place, there is usually a sub-category contained in the finished
goods inventory to account for any returned goods that are reclassified or
second grade quality.
Accurately maintaining figures on the finished goods inventory makes it
possible to quickly convey information to sales personnel as to what is
available and ready for shipment at any given time.
Inventory management is important for keeping costs down, while meeting
regulation. Supply and demand is a delicate balance, and inventory
management hopes to ensure that the balance is undisturbed. Highly trained
Inventory management and high-quality software will help make Inventory
management a success. The ROI of Inventory management will be seen in the
forms of increased revenue and profits, positive employee atmosphere, and on
overall increase of customer satisfaction.
CHAPTER 8
BIBLIOGRAPHY / REFERENCES
Books:
1. Research methods: C.R.Kothari
2. Business research methods: Bhati rakesh kumar
3. Inventory management: Max muller and John schreibfeder

Articles:

A study of inventory management systems:

1. Journal of dynamical and control systems(Dr. Tariq Shaikh)

2. International research journal of engineering and technology (Manjusha

patil, Abhishek shelar)

Websites:

1. www. Inventory management.com

2. www.principles of inventory.com

3. www.economic order quantity.com