Inventory Managemesdnt in Ashok Leyland 1

A STUDY ON INVENTORY MANAGEMENT
STATEMENT ABOUT THE PROBLEM

The three primary functions that characterize the occupation are manaement! coor"ination! an"
contro# of in$entory an" systems of in$entory manaement% Manaement of in$entory recor"s
an" re#e$ant "etai#s is an important area of concern for e$ery oranization! &hether it is #are or
sma##% An" a#so ca##s for efficient p#annin an" maintenance% Thin' of a situation &hen you ha$e
to #oo' into $arious reisters to fin" an" enter each an" e$ery minor man"atory "etai#% An" the
situation oes &orse &hen you nee" to manae a num(er of such reisters% E$ery reister nee" to
(e up"ate" to ma'e the recor"s up to "ate% O($ious#y! manain num(er of such recor"s an"
reisters manua##y soun"s to (e tru#y a #a(orious )o( an" ca##s for efficient an" effecti$e p#annin
an" imp#ementation of effecti$e s'i##s to et the )o( "one%
*ut &hat for! if not a## (ut a ma+imum part of the )o( of manaement can (e "one automatica##y
&ith )ust the c#ic' of a (utton,,Soun"s a (it re#ie$in an" interestin! isn-t it,, .ere comes the
concept of
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WHAT IS INVENTORY
Despite its importance to the supp#y chain! in$entory is not uni$ersa##y &e## un"erstoo"% It is
$arious#y characterize"! (oth positi$e#y an" neati$e#y! as an economic asset to a non/income/
pro"ucin use of capita# fun"s% On#y &hen consi"ere" in #iht of a## 0ua#ity! c#ient ser$ice an"
economic factors1from the $ie&points of purchasin! manufacturin! sa#es an" finance1"oes
the &ho#e picture of in$entory (ecome c#ear% No matter the $ie&point! effecti$e in$entory
manaement is essentia# to supp#y chain competiti$eness%
In$entory is a #ist for oo"s an" materia#s! or those oo"s an" materia#s themse#$es! he#"
a$ai#a(#e in stoc' (y a (usiness% In$entory are he#" in or"er to manae an" hi"e from the
customer the fact that manufacture2supp#y "e#ay is #oner than "e#i$ery "e#ay! an" a#so to ease
the effect of imperfections in the manufacturin process that #o&er pro"uction efficiencies if
pro"uction capacity stan"s i"#e for #ac' of materia#s% In other &or"s! In$entory is a 0uantity or
store of oo"s that is he#" for some purpose or use 3the term may a#so (e use" as a $er(! meanin
to ta'e in$entory or to count a## oo"s he#" in in$entory4% In$entory may (e 'ept 5in/house!5
meanin on the premises or near(y for imme"iate use6 or it may (e he#" in a "istant &arehouse
or "istri(ution center for future use% 7ith the e+ception of firms uti#izin )ust/in/time metho"s!
more often than not! the term 5in$entory5 imp#ies a store" 0uantity of oo"s that e+cee"s &hat is
nee"e" for the firm to function at the current time 3e%%! &ithin the ne+t fe& hours4%
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NEED FOR THE STUDY
o To a$oi"in &astae
o To a$oi" shortae of materia#
o To a$oi" #ac' of materia#
o To manae in$entory effecti$e#y
o To meet une+pecte" "eman"s of materia#

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SCOPE OF THE STUDY
The present stu"y aims at the fo##o&in
o .ih#iht the nee" for an" nature of in$entory%
o Un"er#ine nee" for in$estin in current assets an" e#a(orate the concept of
in$entory manaement%
o 8ocus on the nee" for ana#yzin in$estment in in$entory%
o Discuss the process of manain in$entory%

OBJECTIVE OF THE STUDY
To c#assify the ra& materia# for the (etter contro#
To recommen" proper in$entory manaement
To suest suita(#e measures to impro$e the in$entory manaement system
To stu"y the effecti$e uti#ization of in$entory
To maintaine" #are size of in$entory of ra& materia#s an" &or' in process for efficient
an" smooth pro"uction an" finishe" oo"s for uninterrupte" sa#es operation
To maintain a minimum in$estment in in$entory to ma+imize profita(i#ity
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To stu"y &hich item is ha$in the hih percentae of usae in the processin of finishe"
oo"s%
To stu"y the ma)or ra& materia#s (ein use" in Asho' 9ey#an" 9t"! :hennai

LIMITATIONS OF THE STUDY
The information use" primari#y from historica# annua# reports a$ai#a(#e to the pu(#ic an"
same "oes not in"icate the current situation of the firm%
Detai#e" ana#ysis cou#" not (e carrie" for the pro)ect &or' (ecause of the #imite" time
span%
Since financia# matters are sensiti$e in nature the same cou#" not (e ac0uire" easi#y
The stu"y is (ase" on the "ata i$en (y the finance "epartment &hich has its o&n
#imitations%
The information is co##ecte" on#y the secon"ary "ata
An e+tensi$e ana#ysis &as not possi(#e is short of time
The stu"y may not (e "etai#e" in a## respect
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RESEARCH DESIGN
The Term research "esin is "efine" as ;the &ays an" metho"s that are fo##o&e" in ana#yzin
the "ata a$ai#a(#e<
In the a(o$e statement it is 0uite c#ear that in or"er to fin" out the actua# position of the
company the $arious metho"s of ana#ysis shou#" (e ma"e% The "ata co##ecte" from the company
is ana#yze" throuh the fo##o&in metho"s%
Data Collection
8or this research &or' the "ata &ere co##ecte" from primary source as &e## as secon"ary
source%
a P!i"a!# $o%!ce
=rimary "ata &as co##ecte" from persona# inter$ie& an" throuh o(ser$ation an" "irect contact
in finance "eportment
& Secon'a!# $o%!ce
Secon"ary "ata &as co##ecte" from >ourna#s! :ompany (roachers an" Internet!
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an" annua# reports%

INDUSTRY PROFILE
The automo(i#e in"ustry in In"ia is the tenth #arest in the &or#" &ith an annua# pro"uction of
appro+imate#y ? mi##ion units @ is e+pecte" to (ecome one of the ma)or #o(a# automoti$e
in"ustries in the comin years% A num(er of "omestic companies pro"uce automo(i#es in In"ia
an" the ro&in presences of mu#tinationa# in$estment! too has #e" to an increase in o$era##
ro&th fo##o&in the economic reforms of ABBA the In"ian ro&th as a resu#t of increase"
competi$eness an" re#a+e" restrictions%
Hi$to!#(
In ABCD! the Go$t of In"ia an" the In"ian pri$ate sector initiate" manufacturin processes to
he#p "e$e#op the automo(i#e in"ustry! &hich ha" emere" (y the ABEFs in a nascent form%
*et&een ABEF to the economic #i(era#ization of ABBA! the automo(i#e in"ustry continue" to ro&
at a s#o& pace "ue to the many o$t restrictions% >apanese manufacturers entere" the In"ian
mar'et u#timate#y #ea"in to the esta(#ishment of Maruti u"yo% A num(er of forein firms )oint
$entures &ith In"ian companies%
AUTOMOBILE INDUSTRY HISTORY(
In the year AGHB! a 8rench enineer (y the name of Nico#as >% :unot in$ente" the
first automo(i#e to run on roa"s%
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This automo(i#e! in fact! &as a se#f/po&ere"! three &hee#er! mi#itary tractor that
ma"e use of steam enine% The rane of the automo(i#e! ho&e$er! &as $ery (rief an" at the
most! it cou#" on#y run at a stretch for fifteen minutes% In a""ition! these automo(i#es &ere
not fit for the roa"s as the steam enines ma"e them $ery hea$y an" #are! an" re0uire"
amp#e startin time% O#i$er E$ans &as the first to "esin a steam enine "ri$en automo(i#e
in the U%S%
The automo(i#e in"ustry fina##y came of ae &ith .enry 8or" in ABAE for the (u#'
pro"uction in cars% This #ea" to the "e$e#opment of the in"ustry an" it first (eun in the
assem(#y #ines of his car factory% The se$era# metho"s a"opte" (y 8or"! ma"e the ne&
in$ention i%e%4 car! popu#ar amonst the rich as &e## as masses%
Accor"in to the history of automo(i#e in"ustry U%S! "ominate" the automo(i#e
mar'ets aroun" the #o(e &ith no nota(#e competitors% .o&e$er! after the en" of Secon"
7or#" 7ar in ABEC! the automo(i#e in"ustry of other techno#oica##y a"$ance" nations such
as >apan an" certain European nations aine" momentum an" &ithin a $ery short perio"!
(einnin in the ear#y ABIFs! the U%S automo(i#e in"ustry &as f#oo"e" &ith forein
automo(i#e companies! especia##y those of >apan an" Germany%
The current tren"s of the G#o(a# automo(i#e in"ustry re$ea# that in the
"e$e#ope" countries the automo(i#e in"ustry are stanatin as a resu#t of the "roopin car
mar'ets! &hereas the automo(i#e in"ustry in the "e$e#opin nations! such as In"ia an"
*razi#! ha$e (een consistent#y reisterin hiher ro&th rates e$ery passin year for their
f#ourishin automo(i#e mar'ets%
INDIAN AUTOMOBILE INDUSTRY(
In"ia is one of the fastest ro&in automo(i#e in"ustries in the &or#"% After ABHF!
the automo(i#e in"ustry sa& rapi" ro&th an" many automoti$e manufacturers starte"
pro"uction
The automo(i#e in"ustry in In"ia is the se$enth #arest in the &or#" &ith an" annua#
pro"uction of o$er ?%H mi##ion units in ?FFB% In ?FFB! In"ia emere" as Asia-s fourth #arest
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e+porter of automo(i#es! (ehin" >apan! South Jorea an" Thai#an"% *y ?FCF! the country is
e+pecte" to top the &or#" in car $o#umes &ith appro+imate#y HAA mi##ion $ehic#es on the
nation-s roa"s%
A &e## "e$e#ope" transport net&or' in"icates a &e## "e$e#ope" economy% 8or rapi"
"e$e#opment a &e##/"e$e#ope" an" &e##/'nit transportation system is essentia#% As In"ia-s
transport net&or' is "e$e#opin at a fast pace! In"ian automo(i#e in"ustry is ro&in too%
A#so! the automo(i#e in"ustry has stron (ac'&ar" an" for&ar" #in'aes an" hence pro$i"es
emp#oyment to a #are section of the popu#ation% Thus the ro#e of automo(i#e in"ustry cannot
(e o$er#oo'e" in the In"ian economy% In"ian automo(i#e in"ustry inc#u"es manufacture of
truc's! (uses! passener cars! "efence $ehic#es! t&o &hee#ers etc%%! the in"ustry can (e
(roa"#y "i$i"e" into the car manufacturin! t&o/&hee#er manufacturin an" hea$y $ehic#e
manufacturin units%
The ma)or car manufacturers are .in"ustan Motors! Maruti U"yo! 8iat In"ia =$t%
9t"! 8or" In"ia 9t"%! Genera# Motors =$t% 9t"%! .on"a Sie# :ars In"ia 9t"%! .yun"ai Motors
In"ia 9t"%! S'o"a In"ia =$t% 9t"%! Toyota Jir#os'ar Motor 9t"%! to name a fe&%
The t&o &hee#er manufacturin is "ominate" (y companies #i'e TVS! .on"a
Motorcyc#e KScooter In"ia =$t% 9t"%! .ero .on"a! Yamaha! *a)a) etc%%!
The hea$y motors #i'e (uses! truc's! "efence $ehic#es! auto ric'sha&s an" other
mu#ti uti#ity $ehic#es are manufacture" (y Tata/Te#co! Asho' 9ey#an"! Eicher Motors! *a)a)!
Mahin"ra an" Mahin"ra etc%%!
INDIAN AUTOMOBILE MAR)ET(
Many forein companies ha$e (een in$estin in the In"ian automo(i#e mar'et in
$arious &ays such as techno#oy transfers! )oint $entures! strateic a##iances! e+ports an"
financia# co##a(orations% The auto mar'et in In"ia can (oast of attracti$e finance schemes!
increasin purchase po&er an" #aunch of #atest pro"ucts% Some $ita# statistics rear"in the
automo(i#e mar'et in In"ia has (een mentione" (e#o&L
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In"ia ran's ?n" in the #o(a# t&o/&hee#er mar'et
In"ia is the Eth (iest commercia# $ehic#e mar'et in the &or#"
In"ia ran's AAth in the internationa# passener car mar'etM
In"ia ran's Cth pertainin to the num(er of (us an" truc' so#" in the &or#"%
HEAVY VEHICLES MAR)ET(
.ea$y $ehic#es mar'et in In"ia comprises of truc's! machines! am(u#ances an"
schoo# (uses% The popu#ar hea$y $ehic#e (ran"s in In"ia are Vo#$o! Eicher! Tata! Te#co!
Asho' 9ey#an" an" S&ara) Maz"a%
8o##o&in are the ma)or p#ayers in the In"ian .ea$y Vehic#es Mar'etL
Tata Motors is the #arest automo(i#e manufacturin company in In"ia that
manufactures a &i"e rane of hea$y $ehic#es a"herin to &or#" c#ass stan"ar"s% It is the
mar'et #ea"er in commercia# $ehic#es in a## the sements! (e it hea$y $ehic#es! me"ium size
$ehic#es! sma## $ehic#es! (uses or "efence $ehic#es% The hea$y $ehic#es manufacture" (y
Tata Motors ha$e hih#y "e$e#ope" (ra'in structure! hih roun" authorization! (etter
"irection competence an" a muscu#ar (o"y% The a"$ance" enine imparte" to these hea$y
$ehic#es ma'es them a c#ass apart from the other hea$y $ehic#es runnin on the In"ian roa"s
an" .ih&ays% Tata Motors #ea"s this sement &ith a mar'et share of HAN%
Asho' 9ey#an" is an e+c#usi$e#y hea$y $ehic#e manufacturin company situate" in
:hennai an" &as initiate" in the year ABEI% It is one of In"ia-s (iest pro"ucers of hea$y
$ehic#es such as truc's! (uses! mi#itary $ehic#es an" a#so the secon" (iest commercia#
$ehic#e firm in In"ia hea$y $ehic#e "i$ision &ith a mar'et share of aroun" ?GN% Asho'
9ey#an" is a#so reno&ne" for pro"ucin auto spare parts an" enines for marine an"
in"ustria# su(mission%
Eicher Motors &as initiate" in Dr" Septem(er! ABHF% The first firm to manufacture the
first tractor in In"ia% The in"ienous#y manufacture" tractor &as intro"uce" in the In"ian
Page 10

mar'et straiht from Eicher-s 8ari"a(a" factory% The history of the firm can (e trace" (ac'
to ABEI! &hen Goo" earth :ompany &as esta(#ishe" for $en"in an" repairs of importe"
tractors in the nation%
S&ara) Maz"a! a tie up (et&een Maz"a an" S&ara) Enterprise! S&ara) Maz"a represents
a"$ance" In"ian e+pertise an" manufacturin% The firm has Research an" De$e#opment
impro$ement e"e on internationa# sca#e% The firm manufactures $arious pro"ucts such as
*us! Am(u#ance! Truc's etc%
The mo"ern automo(i#e mar'et in In"ia has (een consi"erin 'ey issues in the process of
ro&thL
:ustomer care! an" not )ust ser$ice
Domestic as &e## as mu#ti/nationa# in$estments
Searin throuh cut/throat competitionM
Roa" safetyM
Anti/po##ution normsM
:o/or"ination &ith o$ernment to ena(#e a"$ancement
Use" $ehic#e tra"e
The future of In"ian automo(i#e mar'et is (riht as it #oo's for&ar" to manufacturin an"
imp#ementin ne& inno$ations such as e#ectric cars as pro$i"e" (y Re$a! a#ternate fue#s #i'e
:NG an" 9=G an" pro(a(#y customize" internet automo(i#e or"ers%
Page 11

COMPANY PROFILE
Asho' 9ey#an" has (een a ma)or presence in In"ia-s commercia# $ehic#e in"ustry since
ABEI! the year it &as (orn% The oriin of Asho' 9ey#an" can (e trace" to the ure for se#f/
re#iance! fe#t (y in"epen"ent In"ia% =an"it >a&ahar#a# Nehru! In"iaOs first =rime Minister
persua"e" Mr% Rahunan"an Saran! an in"ustria#ist! to enter automoti$e manufacturin%
They are one of the In"ia-s #ea"in manufacturers of commercia# $ehic#es an" specia#
$ehic#es! enines for in"ustria# purpose! en sets an" marine re0uirement e0uipments% 8or
o$er fi$e "eca"es! Asho' 9ey#an" has (een the techno#oy #ea"er in In"ia-s commercia#
$ehic#e in"ustry! mo#"in the country-s commercia# $ehic#e profi#e (y intro"ucin
techno#oies an" pro"uct i"eas that ha$e one on to (ecome in"ustry norms%
Asho' 9ey#an" at the time of its inception &as 'no&n as Asho' Motors% It &as
assem(#in Austin cars at the first p#ant! at Ennore! near :hennai% In ABCF! the company
starte" assem(#y of 9ey#an" commercia# $ehic#es an" soon the #oca# manufacturin un"er
#icense from *ritish 9ey#an"6 participation in the e0uity capita#! in ABCE! the company &as
re christene" Asho' 9ey#an"%
In ABIG the o$erseas ho#"in (y 9R9I. 39AND ROVER 9EY9AND
INTERNATIONA9 .O9DINGS 9IMITED4 &as ta'en o$er (y a )oint $enture (et&een the
.in"u)a roup! the Non Resi"ent In"ian Transnationa# roup an" IVE:O 8iat S=A part of
the 8iat roup an" Europe-s #ea"in truc' manufacturin company% Asho' =%.in"u)a is the
chairman of the company% The .in"u)a roup a#so associate" &ith Ennore 8oun"ries
9imite"! Automoti$e :oaches an" :omponents 9imite"! an" Gu#f Ash#ey Motors 9imite"%
The su(si"iary ho#"ins are Ash#ey .o#"ins 9t"%! Ash#ey In$estment 9t"%! an"
Asho' 9ey#an" =ro)ect Ser$ices% The chief competitors of the company are6
Mahin"ra
Vo#$o
Page 12

Tata Motors
7ith a comman"in strenth of the a(out A?!FFF emp#oyees the company is #oo'in
for&ar"s to enhance the scope of its action% It is aimin at e+pan"in its pro"uction
operation o$erseas to ma'e it a more #o(a##y accessi(#e company% It is #oo'in to ac0uire a
sma## to me"ium size" commercia# $ehic#e manufacturers in :hina an" other "e$e#opin
nations! &hich ha$e an esta(#ishe" pro"uct #ine% An e+amp#e &ou#" (e the ?FFG ac0uisition
of the :zech (ase" A$ia-s truc' (usiness rechristene" A$ia Asho' 9ey#an" Motors%
Since its inception! Asho' 9ey#an" has (een a ma)or presence an" these years ha$e
(een punctuate" (y a num(er of techno#oica# inno$ations &hich &ent to (ecome in"ustry
stan"ar"% This tra"ition of techno#oica# inno$ations an" #ea"ership &as achie$e" throuh
years of $iorous in/house research an" "e$e#opment%
8rom AI seater to I? seater "ou(#e/"ec'er (uses! from G%C tons to EB tone in
hau#ae $ehic#es! from numerous specia# app#ication $ehic#es to "iese# enines for in"ustria#!
marine an" enset app#ications! Asho' 9ey#an" offers a &i"e rane of pro"ucts%
Asho' 9ey#an" has se$en manufacturin p#ants @
Ennore =#ant! :hennai%
.osur =#ants Unit I! Unit II an" Unit II A%
A#&ar! Ra)asthan%
*han"ara! Maharashtra%
=antnaar! Uttara'han"
Ear#y pro"ucts of Asho' 9ey#an" inc#u"e" the 9ey#an" :omet (us chassis so#" to many
operators inc#u"in .y"era(a" Roa" Transport! Ahme"a(a" Municipa#ity! Tra$ancore State
Transport! *om(ay State Transport an" De#hi Roa" Transport Authority%
In the popu#ar metro cities! four out of fi$e state transport un"erta'in (uses come from
Asho' 9ey#an"% Some of them #i'e the Dou(#e Dec'er an" Vesti(u#e (uses are uni0ue
mo"e#s from Asho' 9ey#an"! tai#or ma"e hih/"ensity routes%
Page 13

Statistics re$ea# that the company is In"ia-s #arest e+porter of me"ium an" hea$y "uty
truc's% It se##s c#ose to ID!FFF me"ium an" hea$y $ehic#es each year% The company has a
near BI%CN mar'et share in the Marine Diese# enine mar'ets in In"ia% At HF mi##ion
passeners a "ay! Asho' 9ey#an" (uses carry more peop#e than the entire In"ian Rai#&ay
net&or'%
T*e Fi+e AL Val%e$ a!e(
A% Internationa#
?% Spee"y
D% Va#ue :reator
E% Inno$ati$e
C% Ethica#
GROWTH MILESTONES OF ASHO) LEYLAND(
ABHH @ 8u## air (ra'es intro"uce"
ABHG @ Dou(#e Dec'er (uses intro"uce"%
ABHI @ =o&er steerin offere"%
ABGB @ Mu#ti/a+#e truc's intro"uce"%
ABIF @ Intera# (us &ith air suspension%
ABB? @ Se#f/certification status for "efence supp#ies%
ABBE @ ISO BFFA :ertification
ABBG @ In"ia-s first :NG po&ere" (us%
ABBI @ PS BFFF :ertification
Page 14

ABBB @ :NG 3:ompresse" Natura# Gas4 intro"uce"%
?FFF @ Euro/I! Enines2$ehic#es intro"uce"%
?FF? @ ISO AEFFF En$ironment Manaement System :ertification%
?FF? @ E+c#usi$e Machine #ine @ ? for .ino cy#in"er%
?FFD @ E/:omet #aunche"%
?FFE @ CF!FFF mar' $ehic#e pro"uce"%
?FFH/ ISO2TS AHBEB :orporate :ertification%
ASSOCIATE COMPANIES(
Automoti$e :oaches K :omponents 9t" 3A::94M
9an'a Asho' 9ey#an"M
.in"u)a 8oun"ries
IRIQAR @ TVSM
Asho' 9ey#an" =ro)ect Ser$ices 9t"M
Gu#f Ash#ey Motors 9t"
Ennore 8oun"ries 9t"
FACILITIES(
The company has se$en manufacturin #ocations in In"ia
A4 Ennore! Tami#na"u
?4 .osurL Unit A! Tami#na"u
D4 .osurL Unit ?! Tami#na"u
E4 .osurL Unit ?A! Tami#na"u
C4 A#&ar! Ra)asthan
H4 *han"ara! Maharashtra
G4 =antnaar! Uttara'han"
Page 15

Asho' 9ey#an"-s Technica# :entre! at Ve##i$oya#cha$a"i in the outs'irts of
:hennai! is a state/of/the/art pro"uct "e$e#opment faci#ity! that apart from mo"ern test trac's
an" component test #a(s! a#so houses In"ia-s one an" on#y Si+ =oster testin e0uipment%
The company has an Enine Research an" De$e#opment faci#ity in .osur%
The ne& p#ant in the North In"ian state of Uttara'han" at =atnanaar is set up at an
in$estment out#ay of Rs%A?FF crores% This p#ant is e+pecte" to o on stream in the year ?FAF
to cater main#y to the North In"ian mar'et ta'in a"$antae of the e+cise "uty an" other ta+
concessions% The faci#ities ha$e (een so "esine" as to accommo"ate further e+pansion in
terms of capacity an" future mo"e#s% At fu## capacity uti#ization! GCFFF $ehic#es &i## ro## out
of the =atnanaar p#ant%
The company has sine" an areement &ith Ras A# Jhaimah In$estment
Authority 3RAJIA4 in UAE for settin up a (us (o"y (ui#"in unit in the Mi""#e east%
CLIENTS ,Not e-*a%$ti+e(
In"ian Army%
US Army%
.on"uras Arme" 8orces 3.A84%
Tami#na"u State Transport :orporation 3TNST:4%
Metropo#itan Transport :orporation 3MT:4! :hennai%
State E+press Transport :orporation 3SET:4! Tami#na"u%
Jera#a State Roa" Transport :orporation%
Maharashtra State Roa" Transport :orporation 3MSRT:4%
An"hra =ra"esh State Roa" Transport :orporation 3A=SRT:4%
=ar$een Tra$e#s%
Sharma Transport%
VISION
Page 16

Achie$in #ea"ership in the me"ium2hea$y "uty sements of the "omestic
commercia# $ehic#e mar'et an" a sinificant presence in the &or#" mar'et throuh transport
so#utions that (est anticipate customer nee"s! &ith the hihest $a#ue /to/cost ratio%
MISSION
/I"entifyin &ith the customer%
/*ein the #o&est cost manufacturer%
/G#o(a# (enchmar'in our pro"ucts! processes an" peop#e! aainst the (est in the
In"ustry%
.UALITY POLICY
Asho' 9ey#an" is committe" to achie$e customer satisfaction (y anticipatin an"
"e#i$erin superior $a#ue to the customer in re#ation to their o&n (usiness! throuh the
pro"ucts an" ser$ices offere" (y the company an" comp#y &ith statutory re0uirements%
To&ar"s this! the 0ua#ity po#icy of Asho' 9ey#an" is to ma'e continua#
impro$ements in the processes that constitute the 0ua#ity manaement system! to ma'e them
more ro(ust an" to enhance their effecti$eness an" efficiency in achie$in state" o()ecti$es
#ea"in to
A% Superior pro"ucts manufacture" as a#so ser$ices offere" (y the company%
?% Ma+imum use of emp#oyee-s potentia# to contri(ute to 0ua#ity an" en$ironment (y
=roressi$e up ra"ation of their 'no&#e"e an" s'i##s as appropriate to their
functions%
D% Seam#ess in$o#$ement from supp#iers an" "ea#ers in the mission of the company
to a""ress customers chanin nee"s an" protection of the en$ironment
ORGANI/ATION STRUCTURE OF M0$1 ASHO)
LEYLAND LTD1
,AUTHORITY FLOW
Page 17
MANAGING DIRECTOR
WHOLE TIME

PRODUCT PROFILE
Asho' 9ey#an" offers a comprehensi$e pro"uct rane &ith truc's from
G%C tons GV7 to EB tons GV7 3Gross Vehic#e 7eiht4% 8rom AB to IF seaters in passener
transport! a host of specia# app#ication $ehic#es an" "iese# enines for in"ustria# ensets an"
marine app#ication% =ro"uct profi#e can (e (roa"#y sp#it into fi$e cateories $iz% *uses!
Truc's! "efence $ehic#es! specia# Vehic#es an" Enines%
BUSES
Page 18
EXECUTIE DIRECTOR
GENERAL MANAGER
A!!T"GENERAL
MANAGER
!PECIAL DIRECTOR
DII!IONAL
MANAGER
!ENIOR MANAGER
MANAGER
DEPUT# MANAGER
DEPUT# GENERAL
MANAGER
A!!T"MANAGER
!ENIOR O$$ICER
O$$ICER

9YNR *S/II Vi'in *S/II A? M *us/*S II
:heetah 38ront enine4 Vi'in *S/III Vi'in A9
Airport Tarmac :oach Vesti(u#e *us =anther 3Rear enine4
:ruiser Vi'in :NG *S/III 8a#con 38ront enine4
Sta *S/II Dou(#e "ec'er
TRUC)S
E+? .au#ae mo"e#s Ecomet
E+? an" Mu#ti/a+#e Tipper Tractor
Mu#ti A+#e $ehic#es
DEFENCE VEHICLES
Short :hassis *us 8ie#" arti##ery tractor :omet E+E
Topchi fie#" Arti##ery tractor 9on :hassis *us
Sta##ion H+H Sta##ion truc' fire fihtin
SPECIAL VEHICLES
.ippo tractor Sta##ion M' III Tipper .ippo Tipper
*ea$er tractor Rapi" Inter$ention Vehic#e
*ea$er .au#ae .ippo .au#ae
Page 19
ENNORE PLANT(
Asho' 9ey#an" has si+ manufacturin p#ants / the mother p#ant at Ennore near :hennai! t&o
p#ants at .osur 3ca##e" .osur I an" .osur II! a#on &ith a =ress shop4! the assem(#in p#ants at
A#&ar an" *han"ara% The tota# co$ere" space at these si+ p#ants e+cee"s ECF!FFF s0 m an"
toether emp#oyees o$er AA!CFF personne#%
Sprea" o$er ADC acres! Asho' 9ey#an" Ennore is a hih#y interate" Mother
=#ant accountin for o$er EFN A99 pro"uction% The p#ant manufactures a &i"e rane of $ehic#es
an" house pro"uction faci#ities for important areates such as Enines! Gear *o+! A+#es an"
other 'ey in/house components% Num(er of emp#oyees in ennore p#ant are EAEH an" num(er of
mo"e#s manufacture" are AD?% Asho' 9ey#an" is the f#aship company of the *in'%2a 3!o%4 an"
is the secon" #arest manufacturer of commercia# $ehic#es in In"ia%
Asho' motor &as set up in 5678 for the assem(#y of Austin cars% The company name an"
o()ecti$e chane" &ith e0uity participation (y B!iti$* Le#lan' an" Asho' 9ey#an" commence"
manufacturer of commercia# $ehic#es in 5699% It has since than ro&n as a repute" manufacturer
of 0ua#ity automoti$e pro"ucts ranin from #iht commercia# $ehic#es to hea$y "uty $ehic#es
an" for automoti$e! in"ustria# an" marine app#ications% In 568:! the o$erseas ho#" (y 9an" Ro$er
9ey#an" Internationa# .o#i"ays 9t"3LRLIH4 &as ta'en o$er (y a )oint $enture (et&een the
.in"u)a roup! Non/Resi"ent In"ian Transitiona# roup an" IVE:O 3since >u#y ?FFH!the
.in"u)a roup is AFFN sta'e ho#"er of 9R9I.4% Asho' 9ey#an" a#so ac0uire" truc' (usiness unit
of A+ia! P!a3%e 3:zech Repu(#ic effecti$e AB/AF/FH4%
The pro"ucts of the company are of pro$en "esin for "ura(i#ity an"
re#ia(i#ity an" are hence $ery popu#ar (oth in In"ian an" o$erseas mar'ets% In recent years the
pro"uct rane is upra"e" in to the #atest techno#oica# "e$e#opment in the &or#"! for &hich the
company has the technica# support from IVECO ,FIAT 3!o%44! Ita#y for manufacture of IVE:O
caro rane of $ehic#es6 .ino Motors! >apan for manufacture of fue# efficient enines6 an" Q8 !
Germany for manufacture of synchromesh ear (o+es%

In the )ourney to&ar"s the G#o(a# stan"ar" of Pua#ity ! Asho' 9ey#an"
has reache" a ma)or mi#estone in 566; ! &hen it (ecame the first in In"ias automo(i#e in"ustry
to &in ISO 6<<= :ertification% The more comprehensi$e ISO 6<<5 certification came in 5667>
.S 6<<< in 5668 an" ISO 57<<5 certification for a## $ehic#e manufacturin units in =<<=% It has
a#so (ecome the first In"ian automo(i#e company to recei$e the #atest ISO0TS 5?676 corporate
certification &hich is specific to the auto company%
The company has the corporate office reister at C*ennai%
The mar'etin hea"0uarter is at :hennai an" the sa#es an" ser$ices net&or'! "ea#er net&or' an"
spare parts &arehouse sprea" throuhout In"ia &ith reiona# sa#es office an" ser$ices centre
#ocate" in a## ma)or cities an" to&ns in the country% The pro"ucts are a#so e+porte" to a rane of
o$erseas countries
The mar'etin persona# maintain constant interaction &ith customers for app#ication
"e$e#opment an" fee"(ac' for continuous impro$ement of the pro"ucts% The ser$ices function is
carrie" out (y 0ua#ifie" persona# &hose s'i##s are continuous#y upra"e" throuh trainin to meet
the ser$icin re0uirements of ne&er or impro$e" pro"ucts% The "esin function is carrie" out (y
the pro"uct De$e#opment Di$ision operatin throuh E centres $iz% =ro"uct De$e#opment
3Enno!e4 for R@D re#ate" to Asho' 9ey#an" enines! Technica# centre $e##i$oya#cha$a"i for
"esin! proto/type "e$e#opments of $ehic#e! $ehic#es an" components testin6 Enine RKD
3Ho$%!4 for "esin an" "e$e#opment of .ino enines an" A"$ance" Enineerin 3C*ennai4 for
research re#ate" to future pro"ucts%
The manufacturin units of the company are #ocate" at Enno!e ,TN> Ho$%! ,TN4! AlAa!
,Ra2a$t*an4 an" B*an'a!a ,MR4% The Ennore ! .osur 3p#ant / A4! .osur 3p#ant/ii4! Am(attur !
A#&ar an" *han"ara manufacturin units are certifie" ISO 6<<5(=<<< an" .S 6<<<(5668
certification (y In"ian reister Pua#ity system%
The company is a#so certifie" to ISO 57<<5(=<<< @ En$ironmenta# Manaement System for a##
the manufacturin units%
The *han"ara unit of the company has &on the BGol'en PeacocC En+i!on"ental AAa!'
=<<=< of the &or#" En$ironmenta# 8oun"ation in the BLa!3e0"an%Dact%!in3 Bcateory%
Asho' 9ey#an" is a#so the 5$t a%to "o&ile co"4an# to recei$e the ISO0TS
5?676 corporate certification in J%ne =<<?% TS 5?676 rec'on the nuances of automo(i#e In"ustry
an" is more customer centric% It interates the sa#ient concepts of a## the PMS stan"ar"s has (een
accepte" reconize" an" fo##o&e" (y a## automo(i#es manufactures in USA > E%!o4e an" A$ia1
Asho' 9ey#an" has a#so o(taine" ISO =:<<5 certificates for its Ennore Data
canter an" A"$ance" Enineerin roup #ocate" in :hennai% Ennore "ata centre o(taine" the
certificate in Ma# =<<9 an" a"$ance" enineerin in A4!il =<<:%
Int!o'%ction To In+ento!# Mana3e"ent
8inancia# manaement is the manaeria# acti$ity &hich is concern &ith the p#annin an"
contro##in of the firms financia# resources% Thouh it &as a (ranch of economics ti## AIBF as a
separate acti$ity or "iscip#ine% It is of recent oriin sti## it as no uni0ue (o"y of 'no&#e"e of its
o&n an" "ra&s hea$i#y on economics for its theoretica# concepts e$en to"ay%
The su()ect of financia# manaement is of immense to (oth aca"emician an" practicin
manaers% It is of reat interest to aca"emicians the su()ect is sti## "e$e#opin an" there are sti##
certain areas &hen contro$ersies e+ist for &hich unanimous so#utions ha$e (een reache" as yet%
In financia# manaement the &or'in capita# manaement p#ays a ma)or ro#e% The &or'in
capita# manaement &i## (e effecti$e#y manae" (y in$entory manaement% In my present
chapter the in$entory manaement &i## (e "iscusse" in these topics! importance of in$entory
manaement! nature of in$entories! nee" to ho#" in$entories! cost of ho#"in in$entories! other
characteristics of in$entory situations! types of in$entory! economic or"er 0uantity! techni0ues of
in$entory manaement%
Meanin3 oD In+ento!# Mana3e"ent
In$entory manaement means safeuar"in the company property in the form of in$entories an"
maintainin it at the optimum #e$e#! consi"erin the operatin re0uirements an" financia#
resources of the (usiness% In$entory manaement emphasizes contro# o$er purchases! storae!
consumption of materia#s an" "eterminin the optimum #e$e# for each item of in$estments%
I"4o!tance oD In+ento!# Mana3e"ent
In$entory manaement is concerne" &ith 'eepin enouh pro"ucts on han" to a$oi" runnin
out &hi#e at the same time maintainin a sma## enouh in$entory (a#ance to a##o& for a
reasona(#e return on in$estment% =roper in$entory manaement is important to the financia#
hea#th of the corporation6 (ein out of stoc' forces customers turn to competitors or resu#ts in a
#oss of sa#es% E+cessi$e #e$e# of in$entory ho&e$er! resu#ts in #are carryin costs! inc#u"in the
cost of capita# tie" up in in$entory &arehouse fees! insurance etc%
A ma)or pro(#em &ith manain in$entory is that the "eman" for a corporation-s pro"uct is
to a "eree uncertain% The supp#y of the ra& materia#s use" in its pro"uction process is a#so
some&hat uncertain% In a""ition the corporations o&n pro"uction contains some "eree of
uncertainty "ue to possi(#e e0uipment (rea'"o&ns an" #a(or "ifficu#ties%
*ecause of these possi(i#ities! in$entory acts as a shoc' a(sor(er (et&een pro"uct "eman"
an" pro"uct supp#y% If pro"uct "eman" is reater than e+pecte"! in$entory can (e "ep#ete" &ith
out #osin sa#es unti# pro"uction can (e steppe" up enouh to se#ect the une+pecte" "eman"%
.o&e$er in$entory is "ifficu#t to manae (ecause it crosses so many #ines of responsi(i#ity%
The purchasin manaer is responsi(#e for supp#ies of ra& materia# an" &ou#" #i'e to a$oi"
shortaes an" to purchases in (u#' or"er ta'e a"$antaes of 0uantity "iscounts%
The pro"uction manaer is responsi(#e for uninterrupte" pro"uction an" &ants to ha$e
enouh ra& materia#s an" &or' in process! in$entory on han" to a$oi" "isruption in the
pro"uction process% The mar'etin manaer is responsi(#e for se##in the pro"uct an" &ants to
minimize the chances of runnin out of in$entory% The financia# manaer is concerne" a(out
achie$in an appropriate o$era## rate of return%
Nat%!e oD In+ento!ie$
In$entories are stoc' of the pro"uct a company is manufacturin for sa#e an" components
that ma'e up the pro"uct% The $arious forms in &hich in$entories that e+ist in manufacturin
company are
Ra& materia#s
7or'/in/process
8inishe" oo"s

RaA "ate!ial$L These are those (asic inputs that are con$erte" into finishe" pro"uct throuh
the manufacturin process% Ra& materia#s in$entories are those units &hich ha$e (een
purchase" an" store" for future pro"uction%
Wo!CEinE4!oce$$L These in$entories are semi/manufacture pro"ucts% They represent
pro"ucts that nee" more &or' (efore they (ecame finishe" for sa#e%
Fini$*e' 3oo'$( These in$entories are those comp#ete#y manufacture" pro"ucts &hich are
rea"y for sa#e% Stoc's of ra& materia#s an" &or'/in/process faci#itate pro"uction &hi#e stoc'
of finishe" oo"s is re0uire" for smooth mar'etin operations% Thus! in$entories ser$e as
#in' (et&een the pro"uction an" consumption of oo"s%
Nee' to *ol' in+ento!ie$
Maintainin of in$entories in$o#$es tryin up the companies an" incurrence of storae an"
han"#in cost% There are three enera# moti$es for ho#"in in$entories%
T!an$action "oti+eL
It emphasizes the nee" to maintainin in$entories to faci#itate smooth pro"uction
an" sa#es operation%
P!eca%tiona!# "oti+eL
It necessitates the ho#"in of in$entories to uar" aainst ris' of unpre"icta(#e
chanes in "eman" an" supp#y force an" other factors%
S4ec%lati+e in+ento!ie$L
It inf#uences the "ecision to increase or re"uce in$entory #e$e# to ta'e a"$antae of price
f#uctuations% The firm shou#" a#&ays a$oi" a situation of o$er in$estment or un"er
in$estment in in$entories%
The ma)or "aners of o$er in$estment in in$entories are
i% Unnecessary tie up of the fun"s an" #oss of profits%
ii% E+cessi$e carryin cost%
iii% The ris' of #i0ui"ity%
The conse0uences of un"er in$estment in in$entories are
A% =ro"uction ho#"/ups
?% 8ai#ure to meet "e#i$ery commitments% Ina"e0uate ra& materia#s%
D% 7or'/in/process &i## resu#t in fre0uent in pro"uction interrupts%

An efficient in$entory manaement shou#"
Ensure a continuous supp#y of ra& materia#s to faci#itate uninterrupte"
pro"uction%
Maintain sufficient supp#y of ra& materia#s in perio"s of short supp#y an"
anticipate price chanes%
Maintain sufficient finishe" oo"s in$entory for smooth sa#es operation an"
efficient customer ser$ice%
Minimize the transportation cost on time%
:ontro# in$estment in in$entories an" 'eep it at an optimum #e$e#

Co$t oD *ol'in3 in+ento!ie$
The "etermination of in$entory cost is essentia##y an income measurement pro(#em! a means
&here (y there is rationa# or"er#y! systematic interpretation of the effect on the economic
proress of the company of e+pen"itures in$o#$e" ac0uirin oo"s or in maintainin an"
operatin pro"ucti$e faci#ities% A(i#ity to 0uantify an" "e$e#op riorous mo"e#s of most
manaeria# pro(#ems is "epen"ent on the "etermination (eha$ior of re#e$ant costs% The practica#
app#ication of such mo"e#s is a#so "epen"ent on a(i#ity to o(tain the cost "ata% Re#e$ant
in$entory costs &hich chane &ith #e$e# of in$entory are #iste" (e#o&%
O!'e!in3 co$t$
E$ery or"er is p#ace" for stoc' rep#enishment! certain cost are in$o#$e"% The or"erin cost
may $ary! "epen"ent upon type item%
This cost of or"erin inc#u"es
=aper &or' cost! typin an" "ispatchin or"er%
8o##o&/up costs the fo##o&/up re0uire" ensure time#y supp#ies inc#u"e the tra$e# cost for
purchases fo##o&/up! te#ephone te#e+ an" posta# (i##s%
:ost in$o#$e" in recei$in the or"er inception! chec'in an" han"#in to the stores%
Any set up cost of machines if chare" (y supp#ier! either "irect#y in"icate" in 0uotations
or assesse" thouht 0uotations for $arious 0uantities%
The sa#aries an" &aes to the purchase "epartment are re#e$ant for consi"eration if the
purchasin function is carrie" out at the same #e$e# &ith e+istin staff%

There are certain costs that remain the same rear"#ess of the size of the #ot purchase" or
re0uisitione"% This &ou#" (e retai#er or"erin from the "istri(utor! from the "istri(utor or"erin
from a factory &arehouse! for the factory &arehouse or"erin a ne& pro"uction run from the
factory! an" for the factory or"erin ra& materia#s from $en"ors% These 'in"s- of costs are ca##e"
preparation or set up costs%
If &e are or"erin to rep#enish supp#ies at one stoc' point from another stoc' point! our
interest is in the incrementa# c#erica# costs of preparin or"ers! fo##o&in these or"ers%
E+pe"itin them &hen necessary! etc! a #are sement of the tota# cost of the or"erin function is
fi+e"! rear"#ess of the num(er or"ers issue"% E$en then it may (e "ifficu#t "etermine"
satisfactori#y the incrementa# cost! &hich resu#ts from one more or"er% Puantity "iscounts an"
han"#in an" transport cost are other factors! &hich $ary #ot sizes%
=reparation cost are the incrementa# costs of p#annin pro"uction! &ritin pro"uction
or"ers! settin machines an" contro##in the f#o& or"ers throuh the factory% Materia# han"#in
cost in the p#ant ha$e an effect on pro"uction #ot sizes in much the same &ay that freiht costs
may effect purchase #ot sizes%

*esi"es the preparation costs of pro"uction! there are some other pro"uction costs! &hich
ha$e a "irect (earin on in$entory mo"e#s! ho&e$er% These are o$er time premiums an" the
incrementa# cost of chanin pro"uction #e$e#s! such as hirin! trainin! an" separation costs%
Ca!!#in3 co$t$
:arryin costs constitutes a## the costs of ho#"in items in in$entory for a i$en perio" of time%
They are e+presse" either in rupees per perio" or as percentae of the in$entory $a#ue per perio"%
:omponents of these costs inc#u"e the fo##o&in
o Storae an" han"#in cost%
o O(so#escence an" "eterioration costs
o Insurance
o Ta+es
o The cost of the fun"s in$este" in in$entories
o Storae an" han"#in costs inc#u"e the cost of &arehouse space%

O(so#escence costs represent the "ec#ine in in$entory $a#ue cause" (y sty#e chanes that ma'e
the e+istin pro"uct #ess sca#a(#e%
Deterioration costs represent the "ec#ine in $a#ue cause" (y chanes in the physica# 0ua#ity of
the in$entory such as spoi#ae an" (rea'ae%
Another e#ement of carryin cost is the cost of insurin the in$entory aainst #osses "ue to
theft! fire an" natura# "isaster% In a""ition! a company must pay any persona# property ta+es
re0uire" (y #oca# an" state o$ernment on the $a#ue of its in$entories%
9i'e or"erin costs! in$entory/carryin costs contain (oth fi+e" an" $aria(#e components%
Most carryin costs $ary &ith in$entory #e$e#! (ut a certain portion of them/such as &arehouse
rent an" "epreciation on in$entory han"#in e0uipment/ are re#ati$e#y fi+e" o$er the short run!
in$entory mo"e# such as EOP mo"e# treat the entire carryin cost as $aria(#e%
StocC o%t co$t$
Stoc's out costs are incurre" &hen e$er a (usiness is una(#e to fi## or"ers (ecause the
"eman" for an item is reater than the amount current#y a$ai#a(#e in in$entory% 7hen a stoc' out
in ra& materia#s occur! for e+amp#e! stoc' out costs inc#u"e the e+penses of p#acin specia#
or"ers 3(ac' or"erin4 an" "e#ays% A stoc' out in &or' in proress in$entory resu#ts in a""itiona#
costs of resche"u#in an" spee"in pro"uction &ith in the p#ant! an" it a#so may resu#t in re"uce
pro"uction costs if &or' stoppaes occur% 8ina#! a stoc' out in finishe" oo"s in$entory may
resu#t in the imme"iate #oss of profits of customers "eci"e to purchase the pro"uct from the
competitor an" in potentia# #on/term #osses if customers "eci"e to or"er from other companies
in the future%

Ot*e! c*a!acte!i$tic$ oD in+ento!# $it%ation$
*esi"es the $arious types of costs in$o#$e"! there are other characteristics of the situation that
$ary amon types of in$entory an" must (e capture" if the "ecision mo"e# is to (e an accurate
representation of the physica# circumstances%
Lea' ti"e$
O(tainin in$entory usua##y re0uires a #a from the initiation of the process unti# the
in$entory starts to arri$e% This #ea"/time may (e a fe& minutes or it may (e many months! an"
"epen"s in part on &hether the firm is pro"ucin oo"s for its in$entory or is or"erin these
oo"s from another firm% To pro"uce oo"s for its o&n use! the firm must sche"u#e! set up an"
a")ust manufacturin e0uipment%
So%!ce$ an' le+el$ oD !i$C
Uncertainties p#ay a sinificant ro#e in in$entory situations% Uncertainties usua##y in$o#$e #ea"
times an" "eman" times an" "eman" #e$e#s! (ut situations &here other $aria(#es are uncertain
a#so occur% 7here are su(stantia# uncertainties an" &here the costs of stoc' out are important
Strateies for a""ressin ris' must (e formu#ate"S
Static +e!$%$ '#na"ic 4!o&le"$
In$entory pro(#ems are usua##y "i$i"e" into t&o types (ase" on the characteristics of the
oo"s in$o#$e"% In static in$entory pro(#ems! the oo"s ha$e one/perio" #ife6 there can (e
carryin o$er of oo"s from one perio" to the ne+t% In$entory situations &here "ecisions in$o#$e
the num(er of ne&s papers to print! the num(er of reetin car"s to purchase or the num(er of
ca#en"ars to pro"uce are static in$entory pro(#ems% In "ynamic in$entory pro(#ems! the oo"s
ha$e $a#ue (eyon" the initia# perio"6 they "o not #ose their $a#ue comp#ete#y o$er time%

Re4leni$*"ent !ate
Once oo"s start to (e recei$e" from a $en"or or from the firms o&n pro"uction processes!
there are "ifferences amon oo"s in the rate at &hich they are recei$e"% Sma## or"ers from
$en"ors are #i'e#y to (y recei$e a## at once% 8or e+amp#e! assume that a firm has p#ace" in or"er
for AF cases of paper to&e#s% 8or such a sma## or"er the rate of rep#enishment is infinite6 the
firm-s in$entories &e## o up AF cases in a $ery short time as the oo"s are 0uic'#y un#oa"e"%
8or #are or"er from $en"ors! or for in$entory pro"uce" &ith in the firm! the rep#enishment
rate may (e s#o&er%
T#4e$ oD in+ento!#
In$entories can (e c#assifie" into fi$e (asic types on the (asis of their pro"uction% These
$arious types of in$entories cannot (e i"entifie" an" sereate" &ithin the oranization% These
fi$e types are
51 Mana3e"ent in+ento!#
They are nee"e" (ecause of the time re0uire" to mo$e stoc's from one p#ace to another
p#ace%
=1 Lot $iFe In+ento!ie$
These are as a resu#t of (uyin materia#s in 0uantities #arer than the imme"iate re0uirement!
&ith a $ie& to minimizin cost of transportation! (uyin! receipt an" han"#in an" to o(tainin
0uantity "iscount%
;1 Fl%ct%ation In+ento!ie$
These are carrie" to ensure rea"y supp#iers to consumer e$en &hen these are irreu#ar an"
unpre"icta(#e f#uctuations in their "eman"
71 Antici4ation in+ento!ie$
These are usua##y maintaine" to meet a pre"icta(#e (ut chanin pattern of future "eman"
91 C#cle In+ento!ie$
These resu#t from manaements attempt to minimize the tota# cost of carryin an" or"erin
in$entory% They arise from or"erin in (atches or #ots! rather from nee"e" (asis%
In$entories can (e further c#assifie" into pro"uction in$entories maintenance repair an"
operation 3MRO4 in$entories! in/process in$entories an" finishe" oo"s in$entories%
=ro"uction in$entory consists of ra& materia#s parts an" components &hich are use" in
the pro"uction process formin parts of the fina# pro"uct%
Maintenance! repair an" operation supp#ies &hich are use" in the pro"uction of oo"s or
ser$ices (ut "o not (ecome part of the pro"uct%
In/process in$entories are semi/finishe" materia#s! parts an" assem(#ies foun" at $arious
staes in the pro"uction operation%
8inishe" oo"s in$entory consists of comp#ete" pro"ucts rea"y for sa#e%

TECHNI.UES AND SOFTWARE OF INVENTORY MANAGEMENT
In$entory manaement is the acti$e contro# proram &hich a##o&s the manaement of sa#es!
purchases an" payments% In$entory Manaement an" In$entory :ontro# must (e "esine" to
meet the "ictates of the mar'etp#ace an" support the companyOs strateic p#an% The many chanes
in mar'et "eman"! ne& opportunities "ue to &or#"&i"e mar'etin! #o(a# sourcin of materia#s!
an" ne& manufacturin techno#oy! means many companies nee" to chane their In$entory
Manaement approach an" chane the process for In$entory :ontro#%
Despite the many chanes that companies o throuh! the (asic princip#es of In$entory
Manaement an" In$entory :ontro# remain the same% Some of the ne& approaches an"
techni0ues are &rappe" in ne& termino#oy! (ut the un"er#yin princip#es for accomp#ishin
oo" In$entory Manaement an" In$entory acti$ities ha$e not chane"%
The In$entory Manaement system an" the In$entory :ontro# =rocess pro$i"es information to
efficient#y manae the f#o& of materia#s! effecti$e#y uti#ize peop#e an" e0uipment! coor"inate
interna# acti$ities! an" communicate &ith customers% In$entory Manaement an" the acti$ities of
In$entory :ontro# "o not ma'e "ecisions or manae operations6 they pro$i"e the information to
Manaers &ho ma'e more accurate an" time#y "ecisions to manae their operations% The (asic
(ui#"in (#oc's for the In$entory Manaement system an" In$entory :ontro# acti$ities areL
Sa#es 8orecastin or Deman" Manaement
Sa#es an" Operations =#annin
=ro"uction =#annin
Materia# Re0uirements =#annin
In$entory Re"uction
In$entory manaement soft&are he#ps create in$oices! purchase or"ers! recei$in #ists! payment
receipts an" can print (ar co"e" #a(e#s% An in$entory manaement soft&are system confiure" to
your &arehouse! retai# or pro"uct #ine &i## he#p to create re$enue for your company% The
In$entory Manaement &i## contro# operatin costs an" pro$i"e (etter un"erstan"in% 7e are
your source for in$entory manaement information! in$entory manaement soft&are an" too#s%
SOME INVENTORY MANAGMENT SO8T7ARES ARE
A"$ance=ro &# A"$ance&areTechno#oies! E$erestA"$ance" &# E$erest Soft&are >NTS7MS
&# Nationa# Techno#oy Ser$ices etc111
OTHER LOTESI/ING TECHNI.UES
There are a num(er of other #ot/sizin techni0ues a$ai#a(#e in a""ition to the facts state" a(o$e%
These inc#u"e the fi+e"/or"er 0uantity! fi+e"/or"er/inter$a# mo"e#! the sin#e/perio" mo"e#! an"
part/perio" (a#ancin%
FIGEDEORDERE.UANTITY MODEL1
EOP is an e+amp#e of the fi+e"/or"er/0uantity mo"e# since the same 0uantity is or"ere" e$ery
time an or"er is p#ace"% A firm miht a#so use a fi+e"/or"er 0uantity &hen it is capti$e to
pac'ain situations% If you &ere to &a#' into an office supp#y store an" as' to (uy ?? paper
c#ips! chances are you &ou#" &a#' out &ith AFF paper c#ips% You &ere capti$e to the pac'ain
re0uirements of paper c#ips! i%e%! they come AFF to a (o+ an" you cannot purchase a partia# (o+%
It &or's the same &ay for other purchasin situations% A supp#ier may pac'ae their oo"s in
certain 0uantities so that their customers must (uy that 0uantity or a mu#tip#e of that 0uantity%
FIGEDEORDEREINTERVAL MODEL1
The fi+e"/or"er/inter$a# mo"e# is use" &hen or"ers ha$e to (e p#ace" at fi+e" time inter$a#s such
as &ee'#y! (i&ee'#y! or month#y% The #ot size is "epen"ent upon ho& much in$entory is nee"e"
from the time of or"er unti# the ne+t or"er must (e p#ace" 3or"er cyc#e4% This system re0uires
perio"ic chec's of in$entory #e$e#s an" is use" (y many retai# firms such as "ru stores an"
sma## rocery stores%
SINGLEEPERIOD MODEL1
The sin#e/perio" mo"e# is use" in or"erin perisha(#es! such as foo" an" f#o&ers! an" items
&ith a #imite" #ife! such as ne&spapers% Unso#" or unuse" oo"s are not typica##y carrie" o$er
from one perio" to another an" there may e$en (e some "isposa# costs in$o#$e"% This mo"e# tries
to (a#ance the cost of #ost customer oo"&i## an" opportunity cost that is incurre" from not
ha$in enouh in$entory! &ith the cost of ha$in e+cess in$entory #eft at the en" of a perio"%
PARTEPERIOD BALANCING1
=art/perio" (a#ancin attempts to se#ect the num(er of perio"s co$ere" (y the in$entory or"er
that &i## ma'e tota# carryin costs as c#ose as possi(#e to the set/up2or"er cost% 7hen a proper #ot
size has (een "etermine"! uti#izin one of the a(o$e techni0ues! the reor"er point! or point at
&hich an or"er shou#" (e p#ace"! can (e "etermine" (y the rate of "eman" an" the #ea" time% If
safety stoc' is necessary it &ou#" (e a""e" to the reor"er point 0uantity%
Reor"er point TE+pecte" "eman" "urin #ea" time U Safety stoc'
Thus! an in$entory item &ith a "eman" of AFF per month! a t&o/month #ea" time an" a "esire"
safety stoc' of t&o &ee's &ou#" ha$e reor"er point of ?CF% In other &or"s! an or"er &ou#" (e
p#ace" &hene$er the in$entory #e$e# for that oo" reache" ?CF units%
Reor"er point T AFF2month V ? months U ? &ee'sO safety stoc' T ?CF
OTHER SCHOOLS OF THOUGHT IN INVENTORY MANAGEMENT
There are a num(er of techni0ues an" phi#osophies that $ie& in$entory manaement from
"ifferent perspecti$es%
MRP AND MRP II1
MR= an" MR= II are computer/(ase" resource manaement systems "esine" for items that
ha$e "epen"ent "eman"% MR= an" MR= II #oo' at or"er 0uantities perio" (y perio" an"! as such!
a##o& "iscrete or"erin 3or"erin on#y &hat is current#y nee"e"4% In this &ay in$entory #e$e#s can
(e 'ept at a $ery #o& #e$e#6 a necessity for a comp#e+ item &ith "epen"ent "eman"%
JUSTEINETIME ,JIT1
>ust/in/time 3>IT4 is a phi#osophy that a"$ocates the #o&est possi(#e #e$e#s of in$entory% >IT
espouses that firms nee" on#y 'eep in$entory in the riht 0uantity at the riht time &ith the riht
0ua#ity% The i"ea# #ot size for >IT is one! e$en thouh one hears the term 5zero in$entory5 use"%
STEPS TO EFFECTIVE INVENTORY MANAGEMENT
There are t&o "ifferent approaches oranizations can ma'e &ith rear" to in$entory% They can
assume it is )ust a necessary e$i# an" start a specia# in$entory re"uction proram &hene$er cash
ets tiht% Or they can ma'e strateic "ecisions on the #e$e# to carry! put an in$entory
manaement process in p#ace to acti$e#y manae in$entory an" continua##y impro$e the (usiness
resu#ts%%

REVIEW OF LITERATURE
In$entory Manaement is concerne" &ith 'eepin enouh pro"uct on han" to a$oi" runnin
out &hi#e at the same time maintainin a sma## enouh in$entory (a#ance to a##o& for a
reasona(#e return on in$estment% =roper in$entory manaement is important to the financia#
hea#th of the corporation% E+cessi$e #e$e# of in$entory! resu#ts in #are in$entory carryin cost!
inc#u"in the cost of capita# tie" up in in$entory &arehouse fees! insurance etc%
In$entory is nee"e" for the "efinite consumption "eman" of materia#s! an" to ta'e care of the
uncertainty in$o#$e" in the usae or a$ai#a(i#ity of the materia#s% Some times other authors
"escri(e" as the ;"ecoup#in function< of the in$entory of materia#s is maintaine" at the "ifferent
staes of pro"uction%
The in$entory ta'in care of the norma# consumption re0uirements i%e%! ;"epen"in upon the
a$erae consumption rates an" a$erae #ea" times for procurement2manufacture of the materia#!
in$entories are 'ept at the appropriate times< is ca##e" the ;norma# in$entory< an" the in$entory
ta'in care of ;a pro"uction process! ho&e$er continuous it may(e! is (oun" to ha$e some
interruptions6 it may a#so ha$e im(a#ances in the consumption an" pro"uction rates of the
materia#s at "ifferent staes%
These interruptions an" im(a#ances ma'e it necessary to 'eep stoc's of in$entory (et&een
the "ifferent staes of the operations< the aspect of this uncertainty is ca##e" the ;safety stoc'< or
;(uffer stoc'< of in$entory
Tec*niH%e$ oD in+ento!# "ana3e"ent
5 ABC anal#$e$
The A*: metho" is an ana#ytica# metho" of stoc' contro# &hich aims
at concentratin efforts on those items &here attention is nee"e" most% It is (ase" on the premise
that a sma## num(er of the items in in$entory may typica##y represent the (u#' money $a#ue of
the tota# materia#s use" in pro"uction process% 7hi#e a re#ati$e#y #are num(er of items may
represent a sma## portion of the money $a#ue of stores use" an" that sma## num(er of items
shou#" (e su()ect to the reatest "eree of continuous contro#%
Un"er this system! the materia#s stoc'e" may (e c#assifie" into a num(er of cateories
accor"in to their importance i%e%! their $a#ue an" fre0uency of rep#enishment "urin a perio"%
The first cateory! &e may ca## it the roup of WA- items! may consist of on#y a sma## percentae
of tota# items han"#e" (ut its com(ine" $a#ue may (e a #are portion of the tota# stoc' $a#ue%
The secon" cateory! namin it as roup of W*- items! may (e re#ati$e#y #ess important% In the
thir" cateory consistin of W:- items! a## the remainin items of stoc' may (e inc#u"e" &hich
are 0uite #are in num(er (ut their $a#ue is not hih%
Cate3o!ie$ oD ABC anal#$i$
In A*: ana#ysis the items are c#assifie" in three main cateories (ase" on their respecti$e
consumption $a#ue%
A% :ateory WA- itemsL
The items! &hich are most cost#y an" $a#ua(#e! are c#assifie" as WA- near#y AFN of the
tota# num(er of items store" &i## account for GFN of tota# $a#ue of a## items stoc'e"%
?% :ateory W*- itemsL
The items ha$in a$erae consumption $a#ue are c#assifie" as W*- near#y?FN of tota#
num(er of items &i## account for ?FN of tota# $a#ue% Statistica# samp#in is enera#
usefu# to contro# them%
D% :ateory W:- itemsL
The items ha$in #o& consumption $a#ue are put in cateory ;:< near#y GFN of tota#
num(er as items &i## account for AFN tota# $a#ue% Genera##y these items are s#o& an"
non/mo$in items in the stores! &hich are fre0uent#y use" for pro"uction process (ut
&ith more 0ua#ity%
? VED cla$$iDication
This ana#ysis is (ase" on critica#ity of in$entory! it is use" to "etermine the
critica#ity of the item an" its effect on pro"uction an" other ser$ices %it is specia##y use" for
c#assification of spare parts% If a part is $ita#! it is i$en V c#assification% if essentia# !then it
is i$en E c#assification an" if it is not essentia# the part is i$en D c#assification for V
items! a #are stoc' of in$entory is enera##y maintaine" !these item ha$e imme"iate effect
on pro"uction more attention pai" for this items

3) ECONOMIC ORDER .UANTITY
The economic or"er 0uantity is that in$entory #e$e#! &hich minimizes the tota# of or"erin
cost an" carryin costs%
It is the 0uestion! ho& much to or"er the 0uantity &hen in$entory is rep#enishe"% If the firm
is (uyin ra& materia#s! the 0uestion is to purchase the 0uantity of6 each rep#enishment an" if it
has to p#an for pro"uction run! it is ho& much pro"uction to sche"u#e% It may (e so#$e" throuh
EOP%
COST OF HOLDING INVENTORIES
The "etermination of in$entory costs is essentia##y an income measurement pro(#em! a means
&here(y there is a rationa#! or"er#y! systematic interpretation of the effect on the economic
proress of the company of e+pen"itures in$o#$e" in ac0uirin oo"s or in maintainin an"
operatin pro"ucti$e faci#itates% A(i#ity to 0uantify an" "e$e#op riors mo"e#s of most
manaeria# pro(#ems is "epen"ent on the "etermination of the (eha$ior of re#e$ant costs% The
practica# app#ication of such mo"e#s is a#so "epen"ent on a(i#ity to o(tain the cost "ata% Re#e$ant
in$entory costs &hich chane &ith the #e$e# of in$entory are #iste" (e#o&%
O!'e!in3 co$t(
E$ery timer an or"er is p#ace" for stoc' rep#enishment! certain costs are in$o#$e"% The or"erin
cost may $ary! "epen"ent upon the type of item% .o&e$er! an estimate of or"erin cost can (e
o(taine" for a i$en rane of items%
=aper &or' costs! typin an" "ispatchin an or"er%
A% 8o##o& @up costs/the fo##o&/up re0uire" to ensure time#y to ensure time#y supp#ies
inc#u"e the tra$e# cost for purchase fo##o&1up! te#ephone! te#e+ an" posta# (i##s%
?% :ost in$o#$e" in recei$in the or"er inspection! chec'in an" han"#in to the stores%
D% Any set up cost of machines if chare" (y the supp#ier! either "irect#y in"icate" in
0uotations or assesse" throuh 0uotations for $arious 0uantities%
E% The sa#aries &aes to the purchase "epartment are re#e$ant for consi"eration if the
purchasin function is carrie" out at the same "ecreases sinificant#y! o($ious#y a
proportiona# amount of personne# &i## (e transferre" to other "epartments%

Ca!!#in3 Co$t$(
:arryin costs constitute a## the costs of ho#in items in in$entory for a i$en perio" of time%
They are e+presse" either in rupees per unit per perio" or as a percentae of the in$entory $a#ue
per perio"% :omponents of this cost inc#u"e the fo##o&in%
A% Sto!a3e an' Han'lin3 co$t$: It inc#u"es the cost of &arehouse space%
?% O&$ole$cence an' 'ete!io!ation co$t$:O(so#escence costs< represent the "ec#ine in
in$entory $a#ue cause" (y techno#oica# or sty#e chanes that ma'e the e+istin pro"uct
#ess sa#a(#e% ;Deterioration costs< represent the "ec#ine in $a#ue cause" (y chanes in
the physica# 0ua#ity of the in$entory! such as spoi#ae an" (rea'ae%
D% In$%!anceL The in$entory aainst #osses "ue to the theft! fire! an" natura# "isaster%
E% Ta-e$( A company must pay any ;persona# property ta+es an" (usiness ta+es< re0uire"
(y #oca# an" state o$ernments on the $a#ue of its in$entory%
C% T*e co$t oD D%n'$ in+e$te' in in+ento!ie$: It is measure" (y the ;re0uire" rate of
return< on these fun"s% *ecause in$entory in$estments are #i'e#y to (e of ;a$erae ris'<
the o$era## &eihte" cost of capita# shou#" (e use" to measure the cost of these fun"s%
H% Sto!a3e an' Han'lin3 co$t$L It inc#u"es the cost of &arehouse space%
G% O&$ole$cence an' 'ete!io!ation co$t$:O(so#escence costs< represent the "ec#ine in
in$entory $a#ue cause" (y techno#oica# or sty#e chanes that ma'e the e+istin pro"uct
#ess sa#a(#e% ;Deterioration costs< represent the "ec#ine in $a#ue cause" (y chanes in
the physica# 0ua#ity of the in$entory! such as spoi#ae an" (rea'ae%
I% In$%!anceL The in$entory aainst #osses "ue to the theft! fire! an" natura# "isaster%
B1 Ta-e$( A company must pay any ;persona# property ta+es an" (usiness ta+es<
re0uire" (y #oca# an" state o$ernments on the $a#ue of its in$entory%
AF% T*e co$t oD D%n'$ in+e$te' in in+ento!ie$: It is measure" (y the< re0uire" rate of
return< on these fun"s% *ecause in$entory in$estments are #i'e#y to (e of ;a$erae ris'<
the o$era## &eihte" cost of capita# shou#" (e use" to measure the cost of these fun"s%

EOP for an item is arri$e" on the fo##o&in assumptions
A% Deman" is continuous at a constant rate%
?% The process continues infinity%
D% No constraints are impose" on 0uantities or"ere"! storae capacity! (u"et etc%!
E% Rep#enishment is instantaneous%
C% A## costs are time in$ariant%
H% Units are not a$ai#a(#e%

EOP for an item is arri$e" (y the fo##o&in formu#a
EOPT
7here
EOPTeconomic or"er 0uantity
:oTcost of or"erin an or"er
ADT annua# consumption of an item
:.Tcost of carryin one unit2year

7 HML cla$$iDication
The hih %an" me"ium an" #o& 3.M94 c#assification fo##o&s the same proce"ure as
is a"opte" in A*: c#assification% On#y "ifference is that in .M9! the c#assification unit $a#ue
is the criterion an" not the annua# consumption $a#ue% The item of in$entory shou#" (e #iste" to
the "escen"in or"er of unit $a#ue an" it is up to the manaement to fi+ #imits for the three
cateories% 8or e+amp#e! the the manaement may "eci"e" that a## units &ith unit $a#ue of
Rs%?FFF an" a(o$e &i## (e . items! Rs AFFF to ?FFF M items an" #ess than Rs% AFFF! # items%
The .M9 ana#yses is usefu# for 'eepin contro# o$er consumption at "epartment #e$e#s for
"eci"in the fre0uency of physica# ! an" for contro##in purchases%
9 SDE cla$$iDication
The SDE c#assification is (ase" upon the a$ai#a(i#ity of items an" is $ery usefu# in the
conte+t of scarcity of supp#y% In this ana#ysis! S refers to scarce items! enera##y importe"! an"
those &hich are in short% D refers to "ifficu#t items! &hich are a$ai#a(#e in"ienous#y (ut are
"ifficu#t items to procure% Items &hich ha$e to come form "istance p#aces or for &hich re#ia(#e
supp#iers are "ifficu#t to come (y! fa## in to D cateory% E refers to items &hich are easy to
ac0uire an" &hich are a$ai#a(#e in the #oca# strateies
The SDE c#assification% *ase" on pro(#ems face" in procurement! is $ita# to the #ea"/time
ana#yses an" in "eci"in on purchases strateies%
? MINIMUMEMAGIMUM TECHNI.UE
The minimum @ma+imum system is often use" in connection &ith manua# in$entory
contro# system% The minimum 0uantity is esta(#ishe" in the same &ay as any re/ or"er point% The
ma+imum is the minimum 0uantity p#us the optimum #ot @size% In practice! a re0uisition is
initiate" &hen! a &ith"ra&a# re"uces the in$entory (e#o& the minimum #e$e#! an" the or"er
0uantity is the ma+imum minus the in$entory status after the &ith"ra&a#% If the fina# &ith"ra&a#
re"uce the stoc' the stoc' su(stantia##y (e#o& the minimum #e$e#! the or"er 0uantity &i## (e
hiher than the ca#cu#ate" EOP% The effecti$eness of a minimum system is "etermine" (y the
metho" an" precision &ith &hich the minimum an" ma+imum parameters are esta(#ishe"
: TWO BIN SYSTEM
One of the o#"est systems of in$entory contro# is the t&o/(in system!
&hich is main#y a"opte" to contro# : roup in$entories% In the t&o @(in system% Stoc' of each
item is separate" in to t&o (ins% One (in containe" stoc'6 )ust enouh to #ast from the "ate a ne&
or"er is p#ace" unti# it is recei$e" in in$entory% The other (in contains a 0uantity of stoc'%
Enouh to satisfy pro(a(#e "eman" "urin the perio" of rep#enishment% to start &ith ! the stoc' is
issue" from the first (in% 7hen the first (in is empty! an or"er for rep#enishment is p#ace"! an"
the stoc' in the secon" (in is uti#ize" unti# the or"er materia# is recei$e"
Such a metho" is appropriate to i"ea# con"itions in &hich the rate of consumption is fair#y
constant an" for items% The #ea"/time of &hich is fair#y esta(#ishe" an" reu#ar
A#thouh the system itse#f possesses a hih "eree of automacy! in practice! &e nee" to a##o& for
$ariation in the rate of consumption as &e## as #ea"/time% .o&e$er! for such a system! the most
"esira(#e 0uantity to re/or"er is the EOP% Since the 0uantity to re/or"er is fi+e" in a"$ance!
initiation of rep#enishment action can (e "e#eate" to the #o&er staff an" there is nee" to ta'e
physica# count of in$entory #e$e#s%

Stati$tical tool$
ABC ANALYSIS FOR THE YEAR =<5<E=<55
ITEMS .TY
.TY
VALUE
VALUE
,IN
LA)HS
I CUMLATIVEI
ABC
ANALYSIS
I$eco :aro
3.o#"er *a##
Meta#4 9mAI /
FFA
DAE%DH ?IHD B%FFFA?G AF%AEHDH AF%AEH A
7iper Motor
An" 9in'
Motion
Assem(#y =art
II%DA CHH? C%FFFAA? C%HDHBAC AC%GI?BA A
Gunny *as3in
(a#es4
?HA%IA ?AHFF CH%CCFBH HD%GCDAH GB%CDHFG A
8ire 7oo" DDH%GG AECC E%BFFFFE C%C?EFCH IC%FHFAD A
Desc#ant DH%CH GC?? ?%GCFFED D%AFF?I? II%AHFEA *
Antifoam
aent oi#
I?%H? DIGD D%ABBIGD D%HFGEFA BA%GHGIA *
.y"rosu#pet
so"a
A%D? AAHH F%FFAGEB F%FFABG? BA%GHBGI *
Viscosity
re"ucer
IBE%DA ?EH ?%?FFFFD ?%EIFAB BE%?EBBG *
So"ium he+
meter
AH%DD GDCF A%?FF?CC A%DCDAAG BC%HFDFB :
See" s#ary AD%DB AACGC A%CEBIBD A%GEG?ID BG%DCFDG :
Manof#oc' ECE%CC DHD A%HCFFAG A%IHFACB BB%?AFCD :
=osporic Aci" IE%AD ID? F%HBBBH? F%GIBAFG AFF :
881:<; 5<<

TABLE SHOWING THE ABC ANALYSIS FOR MATERIAL @ COMPONENTS
S NO A*: ANA9YSIS TOTA9
A A E
? * E
D : E

CHART SHOWING THE ABC ANALYSIS
INFERENCE
A(o$e ta(#e sho&in the "etai#s for stores "ifferentia# that materia# are c#assifie" in A * :%
A(o$e B%DN materia# i$en A% than a(o$e the D%D?N to (e#o& B%DN materia# $a#ue is *%than
(e#o& D%D?N materia# a""in $a#ue is :%
ABC ANALYSIS FOR THE YEAR =<55E=<5=

ITEM .TY VALUE
TOTAL
VALUE
I CUMULATIVEI ABC
I$eco :aro
3.o#"er *a## Meta#4
9mAI / FFA
DCB%I? ??FFF GB%AHFE GA%AIEAG GA%AI A
7iper Motor An" EDD%HI ?BAF A?%H?FFII AA%DEIEI I?%C?IEIDIH A
9in' Motion
Assem(#y =art
Antifoam aent
oi#
BA%?H DBA? D%CGFFBA? D%?AFDHI IC%GDIICAC? *
Desc#ant EF%DB GG?C D%A?FA?GC ?%IFCGE? II%CEECBDBH *
.y"rosu#pet so"a A%DHC AAHC F%F??G? F%FF?EEH II%CEGFDBIB :
Su#pher ID%BA CHGD E%GHF?AED E%?IFCGE B?%I?GHADEH *
8ire 7oo" AG%E AHGC F%?BAEC F%?H?FID BD%FIBHBHIG :
Mano f#oc' EHG%CG DGF A%GDFFFB A%CCCHBD BE%HECDIBH :
=hosphoric aci" BB%AH IDG F%I?BBHB? F%GEHDEA BC%DBAGDFIE :
See" s#ary AA%CG AAHGF A%DCF?AB A%?AEAG BH%HFCBFADE :
So"ium he+meter ?E%E? GEC? A%IABGGIE A%GCDCFB BI%DCBEAFC? :
Viscosity re"ucer GIB%EG ?EG A%BEBBBFB A%GCDCFB AFF :
5551=<9<9:9 5<<

A A ?
? * D
D : G

INFERENCE
A(o$e ta(#e sho&in the "etai#s for stores "ifferentia# that materia# are c#assifie"
in A * :% A(o$e AF%BD N materia# i$en A% than a(o$e the ?%DHN to (e#o& AF%BDN materia#
$a#ue is *% than (e#o& ?%DHN materia# a""in $a#ue is :%

ABC ANALYSIS FOR THE YEAR =<5=E=<5;
ITEM .TY
.TY
VALUE
VALUE,in
lC$
I CUMLATIVEI
ABC
ANALYSIS
I$eco :aro
3.o#"er *a##
Meta#4 9mAI /
FFA
DIA%CH ?I?F AF%GCBBB I%A?HHFC I%A?HH A
7iper Motor
An" 9in'
Motion
Assem(#y =art
EFD%C? ?DHFF BC%?DFG? GA%B?EFG IF%FCFHGA A
Desc#ant CG%HB GIFF E%EBBI? D%DBICE ID%EEB?AA *
Su#pher AFD%GE CID? H%FCFAAG E%CHBEAB II%FAIH?B *
Antifoam
aent oi#
BI%EH DBFF D%IDBBE ?%BFFACI BF%BAIGIG *
See" s#ary ?E%?A AAHCF ?%I?FEHC ?%ADFAII BD%FEIBGC *
manof#oc' HCC%FD DG?%C ?%EDBBIG A%IE?I?G BE%IBEBAE :
=hosphoric ??I%DG ID? A%BFFFDI A%EDCF?C BH%D?BBDB :
Aci"
So"ium
he+meter
DF%HA DF%HA F%FFBDG F%FFGFGG BH%DDGFAH :
Viscosity
re"ucer
IIC%C ?H? ?%D?FFA A%GC??AE BI%FIB?D :
8ire 7oo" AEI%I? AGFF ?%C?BBE A%BAFGHH AFF :
5;=17<79 5<<

A A ?
? * E
D : C
INFERENCE A(o$e ta(#e sho&in the "etai#s for stores "ifferentia# that materia# are
c#assifie" in A * :% A(o$e G%GCN materia# i$en A% than a(o$e the ?%FAN to (e#o& G%GCN
materia# $a#ue is *% than (e#o& ?%FAN materia# a""in $a#ue is :

ABC ANALYSIS FOR THE YEAR =<5;E=<57
ITEM .TY VALUE
TOTAL
VALUE
I
CUMULATIVE
I
ABC
ANALYSIS
I$eco :aro
3.o#"er *a##
Meta#4 9mAI /
FFA
HA? DFFF AI%DH ?D%BHACE ?D%BHACDI A
7iper Motor
An" 9in' Motion
Assem(#y =art
AGF%?E ?EIFF E?%?ABC? CC%AFFEG GB%FH?FFI A
Desc#ant ?F%HI GID? A%HABHCI ?%AADIFH IA%AGCIAE *
Su#pher CH%CC CIFF D%?GBB E%?IFCI IC%ECHDBE *
See" s#ary AE%B? AAGDF A%GCFAAH ?%?IEFHG IG%GEFEHA *
So"ium
he+meter
??%AD GCFF A%HCBGC ?%AHHADA IB%BFHCB? *
8ire &oo" AIF%CH AIFF D%?CFFI E%?EAHH? BE%AEI?CE *
Antifoam
aent oi#
EF%DI DBAD A%CIFFHB ?%FH?AE BH%?AFDBE *
Manof#oc' DCG%B? DID%I A%DGDHBG A%GB?IFC BI%FFDABB :
Viscosity
re"ucer
D?I ?CF F%I? A%FGFAGI BB%FGDDGH :
=hosporic Aci" ID%CD ICF F%GAFFFC F%B?HH?E AFF :
:?1?==:6 5<<

A A ?
? * G
D : D

INFERENCE
A(o$e ta(#e sho&in the "etai#s for stores "ifferentia# that materia# are c#assifie"
in A * :% A(o$e ?D%?N materia# i$en A% than a(o$e the ?%FAN to (e#o& ?D%?N materia# $a#ue is
*% than (e#o& ?%FAN materia# a""in $a#ue is :

HIGH AND MEDIUM AND LOW CLASSIFICATION
THE CLASSIFICATION HIGH AND MEDIUM AND LOW FOR THE YEAR =<5<E=<55
ITEMS .TY
.TY
VALUE
VALUE,IN
LA)HS
HML
CLASSIFICATION
I$eco :aro 3.o#"er *a##
Meta#4 9mAI / FFA
DAE%DH ?IHD B%FFFA?G .
7iper Motor An" 9in'
Motion Assem(#y =art
II%DA CHH? C%FFFAA? .
Gunny *as3in (a#es4 ?HA%IA ?AHFF CH%CCFBH .
Desc#ant DH%CH GC?? ?%GCFFED 9
.y"rosu#pet so"a A%D? AAHH F%FFAGEB 9
Viscosity re"ucer IBE%DA ?EH ?%?FFFFD 9
So"ium he+ meter AH%DD GDCF A%?FF?CC 9
See" s#ary AD%DB AACGC A%CEBIBD 9
Manof#oc' ECE%CC DHD A%HCFFAG 9
=osporic Aci" IE%AD ID? F%HBBBH? 9
8ire 7oo" DDH%GG AECC E%BFFFFE M
Antifoam aent oi# I?%H? DIGD D%ABBIGD M
881:<;
TABLE SHOWING MATERIALS @COMPONENTS
S NO H M L CLASSIFICATION TOTAL
A . D
? M ?
D 9 G

INFERENCE
The a(o$e ta(#e sho&in the "etai#e" for stores materia# "ifferentiation the
materia# c#assifie" in hih an" me"ium an" #o& if the tota# $a#ue is a(o$eC #a'hs is c#assifies as
hih !if the tota# $a#ue is a(o$e D#a'hs an" (e#o& C#a'hs is c#assifie" as me"ium! if the tota#
$a#ue is (e#o& D #a'hs is c#assifie" as #o& $a#ue
THE CLASSIFICATION HIGH AND MEDIUM AND LOW FOR THE YEAR =<55E=<5=
ITEM .TY VALUE
TOTAL
VALUE
HML
CLASSIFICATION
I$eco :aro 3.o#"er *a## Meta#4
9mAI / FFA
DCB%I? ??FFF GB%AHFE .
7iper Motor An" 9in' Motion
Assem(#y =art
EDD%HI ?BAF A?%H?FFB .
Antifoam aent oi# BA%?H DBA? D%CGFFBA M
Desc#ant EF%DB GG?C D%A?FA?I M
.y"rosu#pet so"a A%DHC AAHC F%F??G? 9
Su#pher ID%BA CHGD E%GHF?AE .
8ire 7oo" AG%E AHGC F%?BAEC 9
Mano f#oc' EHG%CG DGF A%GDFFFB 9
=hosphoric aci" BB%AH IDG F%I?BBHB 9
See" s#ary AA%CG AAHGF A%DCF?AB 9
So"ium he+meter ?E%E? GEC? A%IABGGI M
Viscosity re"ucer GIB%EG ?EG A%BEBBBA M
5551=<95 5<<
S NO H M L CLASSIFICATION TOTAL
A . E
? M C
D 9 D

INFERENCE
materia# c#assifie" in hih an" me"ium an" #o& the a(o$e 0uantity $a#ue is D%C Thousan"s is hih
c#assification an" a(o$e A%? Thousan"s to D%C Thousan"s is me"ium an" (e#o& A%? Thousan"s is
#o& her hih c#assification of materia# is #o& consumption an" #o& c#assification of materia#s is
hih consumption an" me"ium c#assification of ra& materia# is consumption is me"ium
THE CLASSIFICATION HIGH AND MEDIUM AND LOW FOR THE YEAR =<5=E=<5;
ITEM .TY
.TY
VALUE
VALUE,in
laC*$
HML
CLASSIFICATION
I$eco :aro 3.o#"er *a##
Meta#4 9mAI / FFA
DIA%CH ?I?F AF%GCBBB .
7iper Motor An" 9in'
Motion Assem(#y =art
EFD%C? ?DHFF BC%?DFG? .
Desc#ant CG%HB GIFF E%EBBI? M
Su#pher AFD%GE CID? H%FCFAAG .
Antifoam aent oi# BI%EH DBFF D%IDBBE M
See" s#ary ?E%?A AAHCF ?%I?FEHC M
manof#oc' HCC%FD DG?%C ?%EDBBIG 9
=hosphoric Aci" ??I%DG ID? A%BFFFDI 9
So"ium he+meter DF%HA DF%HA F%FFBDG 9
Viscosity re"ucer IIC%C ?H? ?%D?FFA 9
S NO . M 9 :9ASSI8I:ATION TOTA9
A . D
? M D
D 9 E

INFERENCE
The a(o$e ta(#e sho&in the "etai#e" for stores materia# "ifferentiation the materia# c#assifie" in
hih an" me"ium an" #o& if the tota# $a#ue is a(o$e H#a'hs is hih c#assification an" a(o$e
?%C#a'hs an" (e#o& H#a'hs me"ium an" (e#o& ?%C #a'hs is #o& c#assification% hih c#assification
of materia# is #o& consumption an" #o& c#assification of materia#s is hih consumption an"
me"ium c#assification of ra& materia# is consumption is me"ium

THE CLASSIFICATION HIGH AND MEDIUM AND LOW FOR THE YEAR =<5;E=<57
ITEM .TY VALUE
TOTAL
VALUE
HML
CLASSIFICATION
I$eco :aro 3.o#"er *a## Meta#4
9mAI / FFA
HA? DFFF AI%DH .
7iper Motor An" 9in' Motion
Assem(#y =art
AGF%?E ?EIFF E?%?ABC? .
Desc#ant ?F%HI GID? A%HABHCI M
Su#pher CH%CC CIFF D%?GBB M
See" s#ary AE%B? AAGDF A%GCFAAH M
So"ium he+meter ??%AD GCFF A%HCBGC M
8ire &oo" AIF%CH AIFF D%?CFFI M
Antifoam aent oi# EF%DI DBAD A%CIFFHB 9
Manof#oc' DCG%B? DID%I A%DGDHBG 9
Viscosity re"ucer D?I ?CF F%I? 9
=hosporic Aci" ID%CD ICF F%GAFFFC 9
:?1?==:6
S NO . M 9 :9ASSI8I:ATION TOTA9
A . ?
? M C
D 9 E
IN8EREN:E
materia# c#assifie" in hih an" me"ium an" #o&% If the tota# $a#ue is a(o$e AI#a'hs is hih
c#assification an" a(o$e A%H #a'hs an" (e#o& AI#a'hs is me"ium an" (e#o& A%H #a'hs is #o& her
hih c#assification of materia# is #o& consumption an" #o& c#assification of materia#s is hih
consumption an" me"ium c#assification of ra& materia# is consumption is me"ium
TABLE SHOWING THE RAW MATERIAL TO
INVENTORY TURNOVER RATIO
YEAR
RAW
MATERIALS
INVENTORY Ratio in I
?FAF/?FAA AIAA AIA?%BH BB%IBAIIBC
?FAA/?FA? ?DD?%CD ACAE%AE ACE%FEBI?E
?FA?/?FAD ?BCA%FH DAGF%HH BD%FGDBBG?
?FAD/?FAE ?DAE%FI D??B%GA GA%HEBGGHH

INFRENCE
8rom the ana#ysis of a(o$e "ata it is infers that the ra& materia# 0uantum is
constant is each an" e$ery year% *ut the N of ra& materia# to in$entory a #itt#e up an" "o&n
mo$ements in each an" e$ery year% Due to chanes in $aria(#e e+pen"iture in pro"uction point

TABLE SHOWING THE INVENTORY TO CURREN ASSET TURNOVER RATIO
YEAR INVENORY
CURRENT
ASSETS
RATIO IN
I
?FAF/?FAA AIA?%BH ?FBG%EH IH%EDCBGEBE
?FAA/?FA? ACAE%AE ?GBD%IG CE%ABCFGGFI
?FA?/?FAD DAGF%HH DEHF%E? BA%H?HEEBBG
?FAD/?FAE D??B%GA EAEB%AE GG%IEFEHIAC

CHART SHOWING THE INVENTORY TO CURRENT RATIO

INFERENCE
8rom the ana#ysis of in$entory to current assets ratio it is infers that the
ratio of in$entory to current assets is ?FA?/ ?FAD% Respecti$e#y it is increase" is in$entory
position in current assets
TABLE SHOWING THE INVENTORY TO FIGED ASSETS TURNOVER RATIO
YEAR INVENORY FIGED
ASSETS
RATIO IN
I
?FAF/?FAA AIA?%BH AADE%HH ACB%GIFF???
?FAA/?FA? ACAE%AE AFHG%DA AEA%IHCFH?H
?FA?/?FAD DAGF%HH AFIC%B ?BA%BIEC?B
?FAD/?FAE D??B%GA A?GE%G ?CD%DGF?FEI

CHART SHOWING THE INVENTOY TO FIGED ASSETS RATIO

INFERENCE
8rom the ana#ysis of a(o$e "ata it is infers that the ratio of in$entory to fi+e" assets it is
"ecreasin from ?FAF/AA to ?FAA/A? in ?FA?/AD it increase" to ?BA%BIN in ?FAD/AE is
"ecrease" to ?CD%DGN %
FINDING THE CO RELATIONSHIP BETWEN PURCHASES AND SALES
YEAR SALES PURCHASES
?FAF/?FAA ABGF%E ABFF%BC
?FAA/?FA? ?II?%EI ?ECE%GE
?FA?/?FAD ABCD%?I ?FBB%IG
?FAD/?FAE DDDH%GG ?DBG%ED

AIM
To "etermine &hether there is co/ re#ationship (et&een purchases of ra& materia# an"
sa#es
YEAR
SALES IN
CRORES
PURCHASES IN
CRORES
G
=
Y
=
GY
?FAF/
?FAA
AB%GFE AB%FFBC DII%?C DHA%DH DGE%CH
?FAA/
?FA?
?I%I?EI ?E%CEGE IDF%IG HF?%CG GFG%CG
?FA?/
?FAD
AB%CD?I ?F%BBIG DIA%CD EEF%BC EAF%AH
?FAD/
?FAE
DD%DHGG ?D%BGED AAAD%E CGE%GG GBB%BG
XRTAFA%ED XYTII%CD
X G
=
T?GAE%FC
X Y
=
TABGB%HC
XRYT??B?%?H

RTF%BF
FORMULA
XRY / 3XR4 3XY4
/////////////
N
R T ////////////////////////////////////////////////
Y XR
?
/ X3R4
?
Y XY
?
/ X3Y4
?
////////////// ///////////

N N

CONCLUSION
There is hih positi$e co/ re#ation (et&een sa#es an" purchases of ra& materia#

DATA ANALYSIS
5 A!e #o% aAa!e a&o%t In+ento!# Mana3e"ent S#$te"J
Yes ////////////////////////////////////////// GC per cent
No /////////////////////////////////////////// AG per cent
Do not 'no&2 :an not say //////////////// FI per cent
Inte!4!etation(
The a&areness #e$e# amon the company officia#s rear"in the e+istence! functionin an"
app#ica(i#ity of in$entory manaement system is hih that is GC per cent! as per the resu#t of the
stu"y%
= Do #o% CnoA t*at #o%! co"4an# *a$ an in+ento!# "ana3e"ent $#$te"J
Yes ////////////////////////////////////////////// G? per cent
No //////////////////////////////////////////////// ?F per cent
Do not 'no&2 :an not say //////////////////// FI per cent
Inte!4!etation(
The company officia#s are a&are a(out their company ha$in an in$entory manaement system%
G? per cent of the respon"ents "o ha$e this a&areness as aainst ?F per centUFI per cent of the
respon"ents &ho are either not a&are or not a(#e to pro$i"e any infrmation in this rear"%
; Do #o% a3!ee t*at t*e!e $*o%l' &e an in+ento!# "ana3e"ent $#$te" in 4lace in an#
o!3ani$ation 0 co"4an#J
Aree //////////////////////////////////////////////// HI per cent
Disaree ///////////////////////////////////////////// A? per cent
Do not 'no&2 :an not say ///////////////////////// ?F per cent
Inte!4!etation(
Accor"in to the response to the a(o$e 0uestion! it appears that e$ery company2oranisation
shou#" ha$e a system or mechanism in p#ace for manain their in$entory%
7 Fo! A*at !ea$on$ 'o #o% Deel t*at t*e!e $*o%l' &e an in+ento!# "ana3e"ent $#$te"J
To smoothen operationa# re0uirement ///////////////////// ?G per cent
To sa$e time //////////////////////////////////////////////////// ?? per cent
To maintain accounta(i#ity an" transparency ////////////////DF per cent
Other reasons /////////////////////////////////////////////////// AC per cent
Do not 'no&2 :an not say //////////////////////////////////// FH per cent
Inte!4!etation(
To e$eryone-s surprise! DF per cent of the respon"ents fee# that it is for accouta(i#ity an"
transparency pupose that in$entory recor"s are maintaine" an" hence the nee" for an in$entory
manaement system% This is fo##o&e" (y the nee" for sa$in time an" the re0uirement of
operationa# smoothness%
9 Do #o% a3!ee t*at t*e in+ento!# "ana3e"ent $#$te" in #o%! co"4an# *a$ D%lDille' t*e
nee'$ Do! A*ic* it Aa$ e+ol+e'J
Stron#y Aree ////////////////////////////////////// ?F per cent
Aree ///////////////////////////////////////////////// EG per cent
Disaree /////////////////////////////////////////////// AC per cent
Stron#y Disaree ///////////////////////////////////// FG per cent
Do not 'no&2 :an not say //////////////////////////// AA per cent
Inte!4!etation(
8rom the a(o$e response! it appears that the in$entory manaement system has more or #ess
achie$e" its o()ecti$es for &hich it &as in p#ace% This is e$i"ent from the HG per cent of the
respon"ents- opinion &ho ha$e either aree" or stron#y aree" in fa$our of this proposition%
.o&e$er the response of ?? per cent of the respon"ents &ho thin' other&ise a#so spea's
somethin%
? W*at acco!'in3 to #o% i$ t*e "a2o! &eneDiit oD 3oin3 Do! an in+ento!# "ana3e"ent
$#$te" &# #o%! co"4an#J
It has ma"e storae an" retrie$a# of materia# easier ///////// DG per cent
Impro$e" Sa#es Effecti$eness ////////////////////////////////// ?H per cent
Re"uce" Operationa# :ost /////////////////////////////////// AI per cent
Other *enifits ////////////////////////////////////////////////// AF per cent
Do not 'no&2 :an not say //////////////////////////////////// FB per cent
Inte!4!etation(
As rear"s the (enifits of ha$in an in$entory manaement system (y the company! the
respon"ents are of the opinion that the ma)or (enifit #ies in re#a+ation in terms of storae an"
retrie$a# of materia#% This is fo##o&e" (y increasin sa#es effecti$eness an" re"uction in
operationa# cost% .o&e$er! a## these (enifits are inter#in'e" an" the separion (et&een them is
more ana#ytica# than anythine#se%
: Do #o% *a+e $Cile' 4!oDe$$ional$ in #o%! co"4an# Do! in+ento!# "ana3e"entJ
Yes /////////////////////////////////////////////// EI per cent
No ///////////////////////////////////////////////// DF per cent
Do not 'no&2 :an not say ////////////////////// ?? per cent
Inte!4!et
ation(
Recruitment of s'i##e" profession#s &e## $ese" &ith #atest in$entory manaement techno#oy!
particu#ary in chemica#s an" paint in"ustry is a concern for the company as it appers that it #ac's
in this "omain%
81 W*at cate3o!# oD 4!oDe$$ionl$ a!e "ana3in3 #o%! co"4an# in+ento!#J
S'i##e" an" traine" ///////////////////////////////// D? per cent
On#y s'i##e" (ut not traine" /////////////////////// AH per cent
Non s'i##e" (ut traine" professiona#s ////////////// ?F per cent
Non s'i##e" an" non traine" professiona#s ///////// ?C per cent
Others /////////////////////////////////////////////////// FG per cent
Inte!4!etation(
As a#rea"y state" a(o$e in the ear#ier 0uestion! a$ai#a(i#ity of traine" an" s'i##e" professiona#s
for in$entory manaement nee"s serious attention of the company%
61 Do #o% a3!ee t*at #o%! co"4an# 3i+e$ "o!e e"4*a$i$ on $oDtAa!e t*an $Cille'
"an4oAe! Ait* !e3a!' to in+ento!# "ana3e"entJ
Stron#y Aree ////////////////////////////////////// AI per cent
Aree ///////////////////////////////////////////////// C? per cent
Disaree /////////////////////////////////////////////// AC per cent
Stron#y Disaree ///////////////////////////////////// FG per cent
Do not 'no&2 :an not say //////////////////////////// FI per cent
Inte!4!etation(
The a(o$e response i$es an impression that the company puts reater emphasis on soft&are
than s'i##e" manpo&er for in$entory "etai#s manaement%
5<1 Do #o% t*inC t*at t*e $oDtAa!e %$e' &# #o%! co"4an# i$ acco!'in3 to t*e 'e$i3n an'
nee'$ oD t*e $#$te"J
Yes ////////////////////////////////////////////////// IH per cent
No //////////////////////////////////////////////////// AF per cent
Do not 'no&2 :an not say ///////////////////////// FE per cent
Inte!4!etation(
The company appears to (e usin the soft&are accor"in to the system re0uirement an" "esin
an" accor"in to the customers- nee"s%
551 W*at i$ t*e 4!i"e c*allen3e &eDo!e #o! co"4an# Ait* !e*a!' to in+ento!#
"ana3e"entJ
9ac' of traine" profession#s /////////////////////////////// E? per cent
Maintenance cost ///////////////////////////////////////////// ?A per cent
:hanin re0uirements of customers ///////////////////////// ?G per cent
Other pro(#ems ////////////////////////////////////////////////// FH per cent
Do not 'no&2 :an not say ///////////////////////////////////// FE per cent
Inte!4!et
ation(
9ac' of a$ai#a(i#ity of traine" profession#s coup#e" &ith maintenance cost an" chanin nee"s of
the customers are percei$e" to (e the in$entory cha##enes (efore the company%
5=1 W*at i$ t*e D%t%!e oD in+ento!# "ana3e"ent $#$te" in #o%! co"4an#J
7i## continue as a successfu# mechanism ///////////////////// ED per cent
May chane accoe"in to time /////////////////////////////////// DD per cent
Sha## co##apse /////////////////////////////////////////////////////// A? per cent
Do not 'no&2 :an not say ///////////////////////////////////////// A? per cent
Inte!4!etation(
The future of in$entory manaement system at =i"i#ite in"ustries appear to pretty oo"! oin (y
the response of our stu"y%
FINDINGS
As ana#ysis of the a(o$e "ata it is foun" that the in$entory to current assets ratio is
IH%EDCN in ?FAF/AA! is CE%ABCC in ?FAA/A?! in ?FA?/AD it is BA%H?H%
As ana#ysis of the a(o$e "ate it is foun" that the ratio of in$entory to fi+e" assets in ?FAF/
AA it is ACG%GIN! in ?FAA/A? it "ecrease" to AEA%IHCN in ?FA?/AD it increase" to
?BA%EIEN an" aain in ?FAD/AE it "ecrease" to ?CD%DGF?N%
8rom hih an" me"ium an" #o& c#assification metho" main#y three ra& materia# items
&ere c#assifie" hih (ut it is uti#ization has is #ees ! remainin four materia#s &ere
c#assifie" as (oth me"ium an" #o& c#assification (ut #o& c#assification items are
consumption is $ery hih%
The ma)or Vehica#s (ein use" in Asho' 9ey#an" are Asho' 9ey#an" U/Truc' Tippers an'
Asho' 9ey#an" U/?C?DT> Asho' 9ey#an" :TAHAH R= an' Asho' 9ey#an" e/comet AFA?1
The purchase of ra& materia# are ha$in hih#y positi$e corre#ation sa#es of finishe"
oo"s

SUGGESTIONS
I sueste" that! the oranization may ha$e to contro# cost! for increasin ra& materia# to
in$entory ratio
I sueste" that the oranization may ha$e too increase ra"ua##y the ratio of in$entory to
fi+e" asset
I sueste" that! the oranization may ha$e to maintain sufficient portion of cash in
current assets! (ecosDe is hih ratio of in$entory to current assets
8rom the stu"y A * : ana#ysis of ra& materia# the company &as oo" sho& the company
may (e use these metho" for the their proper uti#ization an" contro# of ra& materia#
In$entory shou#" (e i$en in accor"ance the chane of techno#oy
Reu#ar fee"(ac' shou#" (e ta'en from the in$entory manaement
Imp#ementation of the in$entory shou#" (e emphasize"
Reu#ar in$entory must (e further up"atin an" mo"ification
The finance "epartment has to maintain the same proce"ure to "e$e#op in$entory
manaement
The company has to concentrate on research an" "e$e#opment so that it can use the
in$entory efficient#y an" re"uce &astaes
:ompany it shou#" stri$e for ;ettin the riht oo"s to the p#ace at the riht time for the
#east cost<%

CONCLUSION
Automo(i#e In"ustry nee"s in$entory for smooth runnin of its acti$ities% It ser$es as a #in'
(et&een pro"uction an" "istri(ution processes% There is enera##y a time #a (et&een the
reconition of a nee" an" its fu#fi##ment% The unforeseen f#uctuations in "eman" an" supp#y of
oo"s a#so necessitate the nee" for in$entory% It a#so pro$i"es cushion for future poses
f#uctuations%
The in$estment in in$entories constitutes the cost of sinificant part of current assets2&or'in
capita# in most of the un"erta'ins% Thus! it is $ery essentia# to ha$e proper contro# as an" &hen
re0uire" an" to minimize in$estment in in$entors%
The Asho' 9ey#an" 9t"%! maintain hih c#osin (a#ances of in$entory it #ea"s to o$er
e+pen"iture so company shou#" contro# o$er e+pen"iture to ma+imize profits%

REFERENCES
o I% M% =ANDEY 3?FFC4! ;financia# manaement<! ninth e"ition $i'as pu(#ishin
house p$t #t"%
o S% N% MA.ES7ARI 3?FFH4! ;financia# an" manaement accountin<! fifth
e"ition! su#tan chan" an" sons! Ne& De#hi%
o :% R% JOT.ARI! ;research metho"o#oy an" techni0ues<% Secon" e"ition! ne&
Aency internationa# p$t #t"%
o *AJER% R %= K .O7 7E99% A%:! ;the preparation of reports<! Ne& Yor'
Rona#" press%
o S%=% GU=T.A 3ABBC4! ;statistica# metho"s! ;su#tan chan" an"! co Ne& De#hi%
o =%RAMMURTY 3?FFC4! ; pro"uction an" operation manaement<! ne& aency
internationa# p$t #t"
o A.U>A .%9! ;economic en$ironment of (usiness! macroeconomic ana#ysis;!
chan"Kcompany #t"! Ne& De#hi! ?FFC%

WEB SITES
&&&% Goo#e%com
&&&%asho'#ey#an"%com
Balance S*eet$ oD ASHO) LEYLAND LTD D!o" MARCH =<5< TO MARCH =<57
3Rs crore4
Ratio$
Ma! K 57 Ma! K 5; Ma! K 5= Ma! K 55 Ma! K 5<
Pe! $*a!e !atio$
A")uste" E=S 3Rs4 E%GD ?%GB A%DG D%DE D%FC
A")uste" cash E=S 3Rs4 H%GE E%D? ?%GA E%HI E%AB
Reporte" E=S 3Rs4 E%GC D%AI A%ED D%CD D%DD
Reporte" cash E=S 3Rs4 H%GH E%G? ?%GG E%IH E%EG
Di$i"en" per share ?%FF A%CF A%FF A%CF A%CF
Operatin profit per share 3Rs4 B%AC C%G? D%CH H%FC C%AI
*oo' $a#ue 3e+c# re$ res4 per share
3Rs4
AB%BE AG%E? AC%GI AC%I? AD%BC
*oo' $a#ue 3inc# re$ res4 per share
3Rs%4
?B%GH ?G%EC ?H%FE AC%BB AE%AD
Net operatin income per share 3Rs4 IC%GC CC%BF EH%DG CB%BD CC%CB
8ree reser$es per share 3Rs4 AI%?C AH%AF AE%ED AE%HB A?%GB
P!oDita&ilit# !atio$
Operatin marin 3N4 AF%HG AF%?D G%HH AF%FB B%D?
Gross profit marin 3N4 I%D? G%EB E%GG G%IH G%?G
Net profit marin 3N4 C%CA C%HH D%FE C%ID C%BE
A")uste" cash marin 3N4 G%ID G%HB C%GG G%GD G%EH
A")uste" return on net &orth 3N4 ?D%G? AC%BB I%HC ?A%A? ?A%IE
Reporte" return on net &orth 3N4 ?D%IF AI%?G B%FC ??%DF ?D%II
Return on #on term fun"s 3N4 AI%HF A?%IB I%GI ?D%AC ?C%CA
Le+e!a3e !atio$
9on term "e(t 2 E0uity A%FF F%BI F%BD F%EA F%?C
Tota# "e(t2e0uity A%FF F%BI F%BD F%EA F%DE
O&ners fun" as N of tota# source EB%BI CF%EH CA%IF GF%CC GE%CF
8i+e" assets turno$er ratio A%GD A%?C A%?H ?%GG ?%IH
LiH%i'it# !atio$
:urrent ratio A%FB A%?? A%?B A%FB A%?B
:urrent ratio 3inc% st #oans4 A%FB A%?? A%?B A%FI A%A?
Puic' ratio F%CD F%G? F%G? F%CB F%GD
In$entory turno$er ratio C%IH C%AA C%DH G%BF I%?B
Pa#o%t !atio$
Di$i"en" payout ratio 3net profit4 EI%BI CE%B? IA%BA EB%IF CA%DA
Di$i"en" payout ratio 3cash profit4 DE%EF DG%FH E?%?E DH%AA DI%?D
Earnin retention ratio CF%IG DG%?E AE%DH EG%E? ED%II
:ash earnins retention ratio HC%C? CB%CD CH%GB H?%EC CB%AH
Co+e!a3e !atio$
A")uste" cash f#o& time tota# "e(t ?%BH D%BG C%EC A%ED A%AH
8inancia# chares co$erae ratio H%HC G%ID D%EA AF%EH ?D%CC
8in% chares co$%ratio 3post ta+4 C%GH G%AH D%DE I%GE AB%HA
Co"4onent !atio$
Materia# cost component 3N earnins4 GD%HB GE%E? GD%I? GE%HH GC%HB
Se##in cost :omponent H%HG G%HI H%BI ?%EE ?%DA
E+ports as percent of tota# sa#es AF%DA I%HH AC%BD AF%AB I%BE
Import comp% in ra& mat% consume" G%FE G%HC C%DG D%GF D%DC
9on term assets 2 tota# Assets F%C? F%EG F%CF F%EB F%E?
*onus component in e0uity capita#
3N4
E%HI E%HI E%HI E%HI E%GF

Inventory Managemesdnt in Ashok Leyland 1

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A STUDY ON INVENTORY MANAGEMENT

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