Acknowledge

ment
I owe great thanks to many people who
helped and supported me during this
project.
My deepest thanks to Ms. Kajal Sarwal
the guide of the project for guiding and
correcting various documents of mine
with attention and care.
I express my thanks to Principal Mr. R.L
Behl of Sri Aurobindo College of
Commerce
and
Management
for
extending her support.
I wish to thank my parents for their
undivided support and interest without
whom I would be unable to complete my
project. At last I want to thank my
friends who motivated me.

TECHNIQUES OF MATERIAL CONTROL:

As discussed above, material control aims at eliminating and minimizing
all kinds of wastes and losses while the materials are being purchased,
procured, stored, handled, issued or consumed. A number of techniques
are used at planning, procuring and holding stage of material which help
in exercising and effecting material cost control. Such techniques have
been discussed below:

Level setting
Economic

VED
Analysis

Order
Quantity
Perpetu
al
Invento
ry
System

Material
(Inventory)
Turnover
Ratio

1.

FNSD
Analysis

Just In
Time
Inventory
System

Double
Bin
Syste
m

ABC Analysis

InputOutput
Rati
o

Material
(Inventory
) Cost
Reports

Level Setting: The materials purchased by a concern may be

classified as: Stock Items, which are taken into store and held until
required. The control of those materials, which are stock items is
known as- Stock Control. This is concerned with the maintenance
of sufficient stocks to meet all requirements after giving due
consideration to:
The availability of capital for the provision of stock
The storage space available
The cost of storage
The risk of loss due to fall in prices, deterioration,
obsolescence, theft etc.
Delivery delays etc.
In order to have proper control on materials, the following levels
are set:

ReOrder
Leve
l

Average
Stock Level

Danger
Level

Minimu
m
Leve
l

Maximu
m
Leve
l

Re-Order Level: It is the point at which if stock of a particular

material in store approaches, the storekeeper should initiate the
purchase requisition for fresh supplies of that material. This level
is fixed somewhere between the maximum and minimum levels in
such a way to meet the requirements of production upto the time
the fresh supply of material is received.
Ordering Level:
Minimum Level + Consumption during the time
required to get the fresh supplies
OR
Maximum Consumption * Maximum Re-Order
Period

Minimum/ Safety Stock Level: This represents the

minimum quantity of the material, which must be maintained in
hand at all times. The quantity is fixed so that production may not
held up due to shortage of the material after considering:
Lead time
Rate of consumption of material during the lead
time
Nature of material
Minimum stock Level: Re-Ordering Level(Normal Consumption
* Normal Re-Order Period)

Maximum Level: It represents the maximum quantity of an

item of material which can be held in stock at any time. Stock
should not exceed this quantity to avoid overstocking, because
it:
Blocks working capital
More godown space will be required

Loss due to obsolescence

Fear of reduction in market values
Maximum Stock Level: Reordering Level + Reordering
Quantity (Minimum
Consumption * Maximum Reordering Period)

This level is fixed after taken into

consideration:

Amount of capital available

Godown Space available
Maximum requirement of stores
Cost of maintaining stores
Likely fluctuation in prices
The seasonal nature of supply of materials
Restrictions imposed by Government
Possibility of change in habits or fashion

Danger Level: This means a level at which normal issues of

material are stopped and issues are made only under specific
instructions.
Danger Level: Average Consumption * Maximum
Reorder period for
emergency purchases

Average Stock Level: This is the desirable quantity of

materials at all times.

Average Stock Level:
Minimum Stock Level + of Reorder Quantity
OR
(Minimum Stock Level + Maximum Stock Level)

2.

Economic Order Quantity: The quantity of material to be

ordered at one time is known as EOQ.
The total costs of a material usually consist of:
Total Acquisition Cost + Total Ordering Cost + Total Carrying
Cost
The total Acquisition costs remains unafected irrespective of
the quantity of materials ordered at one time, unless the
quantity discounts are available. Therefore, the only costs to
be taken care of, while deciding the quantity of a material to
be ordered at one time, are: Ordering and Carrying Costs.
Carrying Cost: It is the cost of holding the material in the stores
and includes: Cost of storage space, which could have been utilized
for some other purpose

 Cot of bins and racks, that have to be provided for the storage
of materials
Cost of maintaining the materials to avoid deterioration

Cost of spoilage in stores and handling

Transportation costs
Cost of Obsolescence
Clerical Cost
All these cost taken together in India amount to somewhere near
about 20-25% of the cost of materials per year. So efforts should
be made to reduce such alarming rate of carrying costs.

Ordering Cost: It is the cost of placing orders for purchase of

materials and includes:
Cost of staff posted in purchasing dept., Inspection section &
Payment dept.
Cost of stationery, postage & telephone charges.
Therefore, EOQ is a technique to derive at the optimum quantity
for purchase order. The objective of EOQ Model is to minimize the
total costs associated with carrying and ordering costs, as the
amount ordered gets larger, average inventory increases and so do
carrying costs.

Assumptions of EOQ:
Dynamic Conditions
Prices remain stable
Quantity to be consumed during a particular period is totally
known.

3.

Just In Time Inventory Analysis: Keeping in view the enormous

carrying cost of inventory in the stores and godowns, manufacturers
and merchandisers are asking for more frequent deliveries with
shorter purchase order lead times from their suppliers. Now-a-days,
organizations are becoming more and more interested in getting
potential gains from making smaller and more frequent purchase
orders. In other words, they are becoming interested in JIT
purchasing system. JIT purchasing is the purchase of materials or
goods in such a way that delivery of purchased items is assured
before their use or demand.
There is a diference between EOQ and JIT model. EOQ
assumes a constant order quantity, whereas JIT advocates a
different quantity for each order, if demand fluctuates. JIT takes
into consideration all these costs and moves outside the
assumptions of the EOQ model.

ADVANTAGES:
Investment in Inventory is reduced.
Carrying cost is reduced.

A reduction in number of suppliers to be dealt with is possible

by contracting with proven suppliers only.
Quality costs like: Inspection cost, scraps and rework costs
etc. are reduced.
Helps in reducing the waste of time of work force and the
entire production process is concentrated on the time spent
in actually producing products.
Higher productivity
Competitive advantage
Improved job satisfaction
Reduced set-up time
DISADVANTAGES:
Dependence on Historical demands
Risky to certain businesses and in certain situations
Demand fluctuations
Communication breakdowns

4.

ABC Analysis: Manufacturing organizations find it useful to

divide materials into three categories for the purpose of exercising
selective control on materials. It is system of inventory control,
which exercises discriminating control over diferent items of
stores classified on the basis of investment involved. In this,
materials are listed in A, B and C categories in descending
order based on money value of consumption.
Ca t egory A: of items consists of only a small percentage i.e.
about 10% of total
items handled by the stores, but require heavy investment about
70% of inventory value, because of their high price or heavy
requirement or both.
Ca t egory B: of items are relatively less important- 20% of the
total items of
material handled by stores and % of investment required is
about 20% of total investment in inventories.
Ca t egory C: 70% of items handled and 10% of value.
For Example:
Group
A
B

Percentage
of
Item
8%
25
%

Percentage
of
Cost
75%
20%

67
%

5%

Such an analysis of materials is known as ABC Analysis. This

technique is also known as:

Stock control according to Value method

Always Better Control (ABC) Method
Proportional Parts Value Analysis Method

ADVANTAGES:

5.

A strict control is exercised

Minimum possible level of investment in inventories
Storage cost is reduced
Management time is saved

VED Analysis: VED (Vital, Essential and Desirable)- analysis is

used primarily for control of spare parts keeping in view the
criticality to production. The spare parts can be divided into three
categories Vital: The spares, the stock-out of which, even for a short
time, will stop production for quite some time and where the
cost of stock-out is very high.
Essential: The spares, the absence of which cannot be
tolerated for more than a few hours or a day and the cost of
lost production is high and which are essential for
production to continue.
Desirable- The parts, which are needed, but their absence for
even a week or
so will not lead to stoppage of
production.
In VED analysis, only those spares are included, which do
not receive the attention, they deserve, if they are
maintained according to ABC analysis.

6.

Perpetual Inventory System: It is a system of records

maintained by the controlling department, which reflects the
physical movement of stocks and their current balance. It is a
system of ascertaining the balance after every receipt and issue
of materials and also reflects the balance in the stores, to
facilitate regular checking and to avoid closing down the firm for
stocktaking. It involves a process:
Bin Cards (i.e. Quantitative perpetual inventory)
Stores Ledger (i.e. Quantitative cum valued
perpetual inventory)
Continuous Stocktaking (i.e.

Physical perpetual inventory)

Bin cards and stores ledger are perpetual inventory records,
whereas Stocktaking is the physical verification of the accuracy
of the above said records.

CAUSES OF MISMATCH BETWEEN RECORDS AND PHYSICAL

STOCK: It is possible that the balance of stock shown by bin
cards and stores ledger may differ from the actual balance of
stock as ascertained by physical verification. It may be due to
some avoidable and unavoidable causes:
Avoidable causes:
Clerical mistakes
Pilferage and thefts
Carelessness in material handling
Short or over-issue of materials
Unavoidable causes:
Actual balance may be less due to shrinkage and
evaporation
Actual balance may be more due to absorption and
moisture
Actual balance may be less due to breakdown of fire,
riots etc.
Material may be lost due to breaking up bulk material
into smaller parts for issue, For example: Some iron
is lost due to breaking up big iron rods into smaller
parts.
ADVANTAGES:
Avoids dislocation of materials
Obviates the necessity for the physical checking of all items of
stores at the end of the year
More reliable check
Accurate and up-to-date records
A system of internal check
Errors and shortage of stock are readily discovered
Capital investment in stores can be kept under control
Correct stock figures for claim to be lodged with the insurance
company for loss on account of stock destroyed by fire.
Better planning for materials
7.

Double Bin System: In this method, the materials are stored in

bins, which are divided into two compartments (two racks, two
shelves or same shelf can be divided into two). Material is issued for
production from the first compartment and the materials from the
second compartment are not touched in regular course. When the
materials in the first compartment are fully consumed, an order is
placed. This method is better applicable:
In Small organizations, which cannot aford expensive
techniques of stores control, or

For materials of comparatively

less value.

8.

Input-Output Ratio: This ratio is used to judge the efficiency

in the usage of material. The ratio indicates the relation between
the units of material put in for production and the units of
finished product.
Input-Output Ratio: Units of Input/ Units of Output * 100

9.

Material Turnover Ratio:

Cost of materials consumed during the period/ Cost of
average stock held during the period
Inventory Turnover in days: Days during the period/
Inventory Turnover Ratio
High Turnover Ratio is an indication of fast moving stock and
less investment in stock
Low Turnover Ratio is an indicator of slow moving stock,
accumulation of
obsolete stock and carrying of too much stock.

10. FNSD Analysis: This divides the items of stores into four
categories in the descending order of importance of their
usage rate.
F indicates fast moving items that are consumed in a
short span of time.
N Indicates Normal moving items, which are exhausted
over a period of a year or so.
S Indicates Slow moving items, which are not issued at
frequent intervals and are expected to be exhausted over a
period of two years or more.
D means dead items and the consumption of such items is
almost Nil.
11. Material Cost Reports: Material Cost Reports serve as means of
communications usually in the written form of facts relating to
materials which should be brought to the attention of the various
levels of management who can use them to take suitable action for
the purpose of material control. The objective is to help the
management
in exercising efective material control and taking appropriate
decisions. Material
Control is divided into three aspects:
Purchase Control: is to ensure the eficiency of purchasing
department
Stores Control: is to ensure the eficiency of the stores
department
Consumption Control

PLANT
LAYOUT:
Once a decision about location of the plant has been taken, next
important problem before the management is to plan suitable layout for
the plant.
The simple meaning of the word Layout is an arrangement. Plant
Layout is the arrangement or physical configuration of departments,
work stations and equipments in the conversion process.
It is the disposition of different production facilities such as machines,
materials, manpower and services required by the plant within the area of
the site selected so as to perform various operations:

in the most efficient and convenient manner

with high quality product
at minimum costs.

In this process, all the inputs of production are given a proper place in the
factory place.
According to Nor Man Galther,
Plant Layout means planning for the location of all machines,
employee work stations, customers service areas and flow
pattern of material and people around, into and within
building.
Plant Layout is an important decision on the part of management.
Efficiency and performance of machines, equipments and processes
depend to a great extent on the layout of plant.

Essentials of a Sound Plant Layout:

Following are the requisites of a sound or good plant layout:

Departmentation
array of

Strategic
placement
of
equipment
s & tools

Scientific
Plant &
Machinery

Smooth flow
of work

Continuou
s
improvem
ent

Proper
arrangement
of material
handling

Comfort and Safety

design

Proper

Factors governing Plant Layout decision:

Every industrial plant aims to achieve the highest standards of
performance by the best or ideal layout. Unfortunately, there is nothing
like a Standard layout, which can match perfectly to each individual
case, because these norms differ from plant to plant, industry to industry
and time to time. The actual layout is the outcome of certain factors or
forces,
which determines it. The most significant factors that influence the type of
layout are:

Factory Location
The Type of Manufacturing Process
The Type of Product
The Material Input
The Employee Requirements
The Machinery in the Factory
The Managerial Policies
Plant Enviornment

Types of Plant Layout:

There are following types of plant layout:

Process/
Function
al
Layout

Combination
/
Hybrid
Layou
t

Types
of
Plant
Layout

Product
Layout

1.

Fixed
position/
Static
Product
Layout

Cellular
Layout/
Group
Technolo
gy

Product Layout:
Product layout is also known as Line Layou t or St raight Lin e
Layou t . It is a kind of arrangement of machines where
machines are gathered and arranged keeping product as a focal
point. The production department installs the machines in
sequence of operations as required in case of a product.
A Product Layout is one in which all machines or processes concerned in
the
manufacture of the same product or range of products are
grouped together. In simple words, it is the:
Arrangement of machines in one line,
Depending on the sequence of
operations. This can be presented as:
Receiving
Heat

Form

Bend

Mill
Treatment

Shippin
g

Pac
k

Inspect
Paint

Supervisi
on
Heigh
t

Storage
Rest Room

Tool Room

W.C.

Bath

Product layout can be arranged in any of the following four alternative

possibilities:

Straight
Line type
Layout

a)

Circul
ar
produ
ct
Layou
t

UShaped
Layou
t

Odd
AngleProduct
Layout

Straight Line type Layout: In this machines are installed as near as

possible, because the output of one machine becomes the input for the
next machine. Following is the diagram
depicting such layout:

Fee
d
R.M
.

SUPERVISION FLOOR
M-1

M-2

M-3

M-4

M-5

M-6

M-7

Form

Bend

Mill

H.Treat

Paint

Inspect

Pack

Ship
F.P.

b) U-Shaped Layout: This is more compact than straight line. It brings about
economy in floor space and allows closer supervision span than straight
line. The following can be the
configuration:
Ship F.P.
R.M.
Feed

Supervisi
on
Heigh
t

Form

Bend
Pack

c)

Mill

Inspect

H.Treat

Paint

Circular Product Layout: Under this arrangement, the machines are laid
out in the shape of a circle and the operations are carried out inside or

outside the circle. Following can be one of the alternatives of this type of
product layout:

d) Odd-Angle Product Layout: It is odd in the sense that there is not

any fixed pattern for arranging the machines, but is designed to
available space. However, sequence of operations is strictly
maintained.

2.

Process Layout:It is an arrangement of machines and equipments

performing similar functions together in an assigned area. It is the
portioning of plant into several work areas or departments in which
area is occupied by similar type of machines i.e. each department as a
whole is known only for performing one operation or process of entire
program of production.

Process Layout is one which is signified by the grouping

together of like machines
based up on their operational characteristics.

3.

4.

This type of layout is best suited to those lines where:

Intermittent type of production is wanted
Non-standardized and small production activities
Unique products

Fixed Position OR Static Product Layout:

It is an arrangement where the needed machines, manpower, tools,
supporting appliances and services are brought to a particular point at
which the production process progresses.
This type of layout is SUITABLE when inputs are very heavy and large
in size that it is not
easy to move them from one place to another.
For Example:
A hospital operating room where doctors, nurses and medical
equipment are brought to the patient
Construction of buildings, dams etc. where all the inputs like:
cement, bricks etc. are brought to the construction site.

Combinations / Hybrid Layout:

As the all the above types of layout involve various merits and
demerits. So, many situations call for a mixture of the three main
layout types. These mixtures are commonly called Combination or
Hybrid Layout.
It is an arrangement of production facilities to achieve compromised
results of the
best of the two basic alternative layout patterns of layout i.e.
Product and Process layout.
For Example: where an item is being made in diferent sizes and is
of unique features and can be produced on mass scale too. It also
permits small lot and large lot output. In such cases, the machines
are arranged on the principles of process layout and the process
grouping is then arranged in a sequence of operations to
manufacture
variety of products as to types and sizes.

5.

Cellular OR Group Technology Layout:

Cellular manufacturing is a type of layout where machines are
grouped according to the process requirements for a set of similar
items that require similar processing. These groups are called cells.
Workers in this layout are cross trained so that they can operate all
the equipment within the cell and take responsibility for its output.
An automated version of cellular manufacturing is the Flexible
Manufacturing System (FMS). With an FMS, a computer controls the
transfer of parts to various processes, enabling manufacturers to
achieve some of the benefits of product
layouts while maintaining the flexibility of small batch production.

Other
Layouts:

Warehouse/Storage Layouts
Office Layouts

PLANT LAYOUT FOR BAKERY INDUSTRY

INTRODUCTION:
Bread is major product for bakery industry, because which is major
consumption by people.
Commercially bread manufactured by three types likeS2, S4 and family
type bread.

MANUFACTURE OF BREAD:
The stages involved in the manufacture of bread are:
1. The preparation if the dough,
2. Fermentation of the dough,
3. Baking.
METHODS FOR PREPARATION OF DOUGH:
Three methods are commonly used for the preparation of the dough:
1. Straight line method,
2. Sponge and dough method,
3. Mechanical dough method

1. Straight-line method:
It is a batch process
Mixing is conducted until the dough attains the desired smoothness and
elasticity.
Advantages:
Minimum labour requirement
Less fermentation time

Better flavour

Disadvantages:
Inflexibility require fixed fermentation time
Ripe-ready dough must be baked when ready.
2. Sponge-dough method: This method consists of two stages;
a) Formation of sponge: The sponge contain about 50-60% of total
flour to be used, the total quantity of yeast and malt and sufficient
water to yield slightly stiff dough.
b) Development of dough: The sponge is mixed with remaining
quantity of flour and water and allowed to ferment for a short time
3. Mechanical method:
It is continuous method,
No bulk fermentation and consequent losses are avoided,
Allows addition of extra water and produces better bread from weaker
flours.

Process Flow
Chart
SELECTING THE INGREDIANTS
FIRST MIXING ( MAIDA, SUGAR, YEAST)
FERMENTAT
ION
SECOND
MIXING
DIVIDI
NG
ROUNDI
NG
INTERPROOFING
MOULDI
NG
FINAL
PROOFING
BAKIN
G
COOLI
NG

SLICI
NG
PACKAGI
NG

Manufacturing Process

FIRST MIXING:
The ingredients are placed in the mixing bowl of capacity of 200 kg. The
mixer is working under the double crank mechanism. The ingredients are
properly mixed by the action of double machine. The time for mixing is
30minutes. The resultant product is called as dough.
FERMENTATION:
The fermentation is done for 1 hour and the quality of bread depends
upon fermentation period. Yeast plays a major role in fermentation
process.
SECOND MIXING:
The purpose of the second mixing is to incorporate the air particles
into the dough. The mixing time is 20 minutes.
DIVIDING:
In the dividing sector, the twin pocket divider was used. The divider has
two pockets. The size and shape of the boxes are adjustable. So we get
the required shape and size of the dough.
ROUNDING:
In the rounding process, the dough from the dividing unit through the belt
conveyor and enter into the rounding machine. Inside the machine the
spiral blades are provided to make round size. In the process the heat is
liberated and the temperature of dough is increased.
INTER MEDIATE PROOFING:
In this process, the heat is removed from the dough, which is generating
during the dividing and rounding process. The intermediate proofed has
75trays and completion of one cycle requires 7 minutes.

MOLDING:
It is the final shaping and sizing operation. In this process, three pairs of
rollers are rolled with different directions. The vanaspathi and sunflower
oil was used as a lubricant for the roller. Then the thin moulded dough is
sent to the final proofer.
FINAL PROOFER:
In the proofer, the steam is passed over the bread at the temperature
of 200c with 16- kg/cm2 pressures. Horizontal tube boiler produces the
steam. The proofing time is 1-1.5 hours.
BAKING:
Baking is done in the large capacity oven. The baking temperature
is 215c for 27-32 minutes.
COOLING:
After the baking was over, then the bread was cooled into the room
temperature. The taken for cooling is one hour.
SLICING AND PACKAGING:
The action of slicer slices the cooled bread and then the breads are
packed in polythene bags each.

Plant Layout for Bread Industry

01. Raw material storage

02. Proofing Section
03. Restroom
04. Reception
05. Mixing
06. Fermentation section
07. Dividing section
08. Rounding section
09. Moulding section
10. Proofing section
11. Baking oven
12. Cooling section
13. Cutting and slicing section
14. Packaging section
15. Finished product storage
16. Toilet
17. Water Tank

Avon
Cycles
Raw Material: Tubes, Stips, Rubber, Steel more than
3000 R.M
Source: Ludhiana. Some materials are imported.
They are having more than 100 models.
Almost 6 to 7 thousand cycles are manufactured per
day.
Lead Time: 1 day and in some cases 12hrs.
No. of Vendors: more than 500
They follow the principle of Kaizen

KAI
ZEN

IMPROVEMENT
BETTERMENT

Inventory Control: They follow Just in Time (JIT) and

Zero Inventory.
On the basis of previous 3-4 years sales forecast
production is
planned and Raw materials are procured from suppliers.

Stores: 10 stores department: 2 raw material stores, 8

finished goods stores. BIN CARDS and online system in
use.