CHAPTER 1

INTRODUCTION

1
 Introduction

The project has been developed to identify the need and importance of operations management in
manufacturing industry. Operations management is done with the objective of coordination of
material with suppliers, efficient utilizations of people and machines, efficient flow of material
and time to time delivery with quality, how to manage inventory and communication with
customer. Operation management is the process which start from raw material to final product
with maximum utilization of time and resources

Operation management facilitates in various ways like optimum utilization of capacity inventory
control, ensure quality and economy in production time.

Operation management is accompanied with control mechanism to ensure desired result. Results
are compared with plans if any deviation is found revision of plan is done. All the operation in
industry can be organized by operation it contain from purchase to sales process in it.

Operations is an area of management concerned with designing and controlling the process of
production and redesigning business operations in the production of goods or services. It
involves the responsibility of ensuring that business operations are efficient in terms of using as
few resources as needed and effective in terms of meeting customer requirements. It is concerned
with managing an entire production system which is the process that converts inputs (in the
forms of raw materials, labor, and energy) into outputs (in the form of goods and/or services), as
an asset or delivers a product or services. Operations produce products, manage quality and
create service. Operation management covers sectors like banking systems, hospitals, companies,
working with suppliers, customers, and using technology.

This project deals with all the important information related to operation management,
production procedure, inventory management study of shop floor, generating’s purchase order
leaning of ERP system works.

2
Objectives of the study

 Objective of the study is how the production planning and control done. Efficient
utilization of the resources, waste reduction, reduce waiting and processing time.
 Study of inventory management technique.
 To know how the production planning contributes to the efficient use of facilities and
equipments.
 To learn how the purchase department works.
 To study the production procedure
 Another objective of the internship was to develop more communication and
management skills.
 Proper list of all things I had to do in the month of internship was provided. It started
with knowing about the whole structure of the company, then the products.
 How to read drawing which machining is required first.
 How to use ERP system in company.
 The manufacturing of the different automotive parts was learned .Learned how different
depts. like the planning , production, design, purchase, store all work together in proper
tandem and coordination to provide the customer with the product before the deadline.
 Conversion of raw material into a finished good was studied. Thus it was a very fruitful
internship for me. I was able to achieve some of the objectives of an industrial internship
and hope will be able to achieve more in further internships.

3
 CHAPTER 2
ORGANIZATION PROFILE

4
 CHAPTER 3

COMPANY PROFILE
INTRODUCTION:

Company- Sharayu engineering Pvt. Ltd.

Sharayu Engineering Pvt. Ltd was established in March 1995 by Vikas Phate plant is in pune.
Company works on design and manufacturing of all type of machining components for machine
tool industry and automotive sectors.
sharayu is a An ISO 9001-2000 Certified Company.

We are widely open to any type of development for part or products demand in all views. I.e.
technical or financial also

5
Mission-

To exceed customer expectations by developing and delivering innovative solutions and

providing them quality products and services. Within Framework of continuous improvement,we
operate our oraganisation safely,efficiently and profitably and provide a challlenging work
environment for our employees

Values-

The company values integrity,reliability and innovation continous improvement.

6
Organization Structure

7
 Company layout:

1. Shopfloor

The ground floor consists of reception at the entrance. It consists of CNC area, VMC area,
inward section cutting section, Drilling area, production, and manufacturing department.

Other building ground floor consist of raw material and milling and grinding shop.

8
Quality lab :

A separate Quality assurance department having all instruments gauges and

knowledgeable quality persons.

To maintain the quality parameters, we have the best knowledgeable person with proper
instrument and gauges in our quality department.

Electra optima height master with 600 mm capacity and extended capacity 800mm Granite
surface plate 1mtr x 1mtr

9
Special gauges and instruments can be made available as per product requirement
Stage inspection is carried out continuously and final QA department with proper manpower

QUALITY OBJECTIVES
Customer Satisfaction:
• By supplying quality products.
• By reducing development time for new products.
• By minimizing rework
Continual Improvement:
• By reducing process time through introducing modern technology and equipment’s.
• By improving housekeeping.

Product and services

These are some of the products which we are manufacturing for our customers as per their
design & requirements. We are also in manufacturing of aluminum alloy & zinc alloy pressure
die, costing components for automotive & engineering sector

Product List:

BASE CYL & BEARING BEL BOX CUTTING DISC GEAR BOX
PUMP HSG HSG PLATE & HSG
PUNCH

10
 PISTON NUT &
HOPPER LPIL HEATING
MTG ARM COOLING SCREW
MTG. PLATE. MANIFOLD ROLLER
NOZZLE SPINDLE

GUIDE KOEL TOP WELD SUCKER MOVING

HSG
PILLER COVER HOUSING ARM PLATE

Current working condition of company for month June-July 2018

Production target 100%

Delivery target 100%

Next month order 40 %

Productivity (All) 85%

Rejected products 5%

Sharayu Engineering Pvt. Ltd has manpower of 85

11
Outsourcing facility :

These are some of the outsourcing facilities that we can provide

All heat treatment processes – such as

All surface treatment processes

Laser marking facility

All types of internal & external key ways
Gear cutting facility
Wire cutting facility
Spark- erosion machine facility

12
 CHAPTER 3

REVIEW OF LITERATURE

13
Literature Review:

 Operations management is an area of management concerned with designing and controlling

the process of production and redesigning business operations in the production of goods or
services. It involves the responsibility of ensuring that business operations are efficient in
terms of using as few resources as needed and effective in terms of meeting customer
requirements. It is concerned with managing an entire production system which is the process
that converts inputs (in the forms of raw materials, labor, and energy) into outputs (in the
form of goods and/or services), as an asset or delivers a product or services. Operations
produce products, manage quality and create service. Operation management covers sectors
like banking systems, hospitals, companies, working with suppliers, customers, and using
technology. An operation is one of the major functions in an organization along with supply
chains, marketing, finance and human resources. The operations function requires
management of both the strategic and day-to-day production of goods and services.

 Ford Motor car assembly line: the classical example of a manufacturing production system.
 In managing manufacturing or service operations several types of decisions are made
including operations strategy, product design, process design, quality management, capacity,
facilities planning, production planning and inventory control. Each of these requires an
ability to analyze the current situation and find better solutions to improve the effectiveness
and efficiency of manufacturing or service operations.

Operations management
 Although productivity benefited considerably from technological inventions and division of
labor, the problem of systematic measurement of performances and the calculation of these
by the use of formulas remained somewhat unexplored until Frederick Taylor, whose early

14
 work focused on developing what he called a "differential piece-rate system" [and a series of
experiments, measurements and formulas dealing with cutting metals [ and manual labor. The
differential piece-rate system consisted in offering two different pay rates for doing a job: a
higher rate for workers with high productivity (efficiency) and who produced high quality
goods (effectiveness) and a lower rate for those who fail to achieve the standard. One of the
problems Taylor believed could be solved with this system, was the problem of soldiering:
faster workers reducing their production rate to that of the slowest worker. In 1911 Taylor
published his "The Principles of Scientific Management", in which he characterized scientific
management (also known as Taylorism) as:
 The development of a true science;
 The scientific selection of the worker;
 The scientific education and development of the worker;
 Intimate friendly cooperation between the management and the workers.
 Taylor is also credited for developing stopwatch time study, this combined with Frank and
Lillian Gilbreth motion study gave way to time and motion study which is centered on the
concepts of standard method and standard time. Frank Gilbreth is also responsible for
introducing the flow process chart in 1921.Other contemporaries of Taylor worth
remembering are Morris Cooke (rural electrification in the 1920s and implementer of
Taylor's principles of scientific management in the Philadelphia's Department of Public
Works), Carl Barth (speed-and-feed-calculating slide rules ) and Henry Gantt (Gantt chart).
Also in 1910 Hugo Diemer published the first industrial engineering book: Factory
Organization and Administration.
 In 1913 Ford Whitman Harris published his "How many parts to make at once" in which he
presented the idea of the economic order quantity model. He described the problem as
follows:
 "Interest on capital tied up in wages, material and overhead sets a maximum limit to the
quantity of parts which can be profitably manufactured at one time; "setup costs" on the job
fix the minimum. Experience has shown one manager a way to determine the economical
size of lots"
 This paper inspired a large body of mathematical literature focusing on the problem of
production planning and inventory control.

15
 In 1924 Walter Shewhart introduced the control chart through a technical memorandum
while working at Bell Labs, central to his method 0was the distinction between common
cause and special cause of variation. In 1931 Shewhart published his Economic Control of
Quality of Manufactured Product, the first systematic treatment , of the subject of Statistical
Process Control (SPC).
 In the 1940s methods-time measurement (MTM) was developed by H.B. Maynard, JL
Schwab and GJ Stegemerten. MTM was the first of a series of predetermined motion time
systems, predetermined in the sense that estimates of time are not determined in loco but are
derived from an industry standard. This was explained by its originators in a book they
published in 1948 called "Method-Time Measurement".
 Up to this point in history, optimization techniques were known for a very long time, from
the simple methods employed by F.W.Harris to the more elaborate techniques of the calculus
of variations developed by Euler in 1733 or the multipliers employed by Lagrange in 1811,
and computers were slowly being developed, first as analog computers by Sir William
Thomson (1872) and James Thomson (1876) moving to the electro mechanical computers of
Konrad Zuse (1939 and 1941). During World War II however, the development of
mathematical optimization went through a major boost with the development of the Colossus
computer, the first electronic digital computer that was all programmable, and the possibility
to computationally solve large linear programming problems, first by Kantorovich in 1939
working for the Soviet government and latter on in 1947 with the simplex method of Dantzig.
These methods are known today as belonging to the field of operations research.

16
 CHAPTER 4
MANUFACTURING PLAN AND INVENTORY
MANAGEMENT

17
 Manufacturing Plan:

The following section consists about the execution order of manufacture of automotive &
engineering component.

First a purchase order comes from the customer. It contains of all the items, parts required by the
customer with the material specification and the quantity required. This job order is sent to
component store. There it is checked the components are available or not. The components
which are not available in component store they informed to the store. There is raw material,
tools, machining, etc all things required to make the product are bought if not available in raw
material. The other parts like the caps, washer caps, etc are bought. Then the planning dept and R
and D dept make the drawing and send it to production dept. Then the product is done inspection
are done and send to component store. Then all parts are assembled and sent for final inspection.

Flow of process from purchase to store:-

Physical Weight or quantity

Inward tag

GRN

Quality inspection of material

System entry

Accept Reject

Stock in store

Issue Transaction

Initially physical weight or quantity checked, and then inward tag is produced. After that GRN
(Goods Receipt Note) is created and materials sent to inspection of GRN. Inspection results
either accept or reject. If material accepted then it send to store .

18
Machine facilities
Band saw Cutting Machine Universal

This is the first operation which goes on the raw material. In the cutting section the raw material
is cut into small pieces of required size to make the component. Some extra part is cut out. This
is done to allow for the cutting holding of the piece in the jaws of CNC.

2 CNC Turning-
CNC refers to Computer Numerical Control. All the turning operations are done inside the CNC.
The programmer feeds in the G code according to the material to be manufactured. All drilling,
facing, turning operation is done inside the CNC. 70% of the product is manufactured in the
CNC. The machining in CNC takes places in 3 stages. In first stage one side is done, in second
stage the 2nd side and in the 3rd stage all other remaining things are done. CNC can be called an
advanced automatic lathe machine. The CNC has a tool post where a maximum of 8 tools can be
fitted. The block of metal which is to be converted is hold in jaws. Lathes can have 2, 3 or 4
jaws. Depending on the block, and process to be done the number of jaws are decided. If the
product has threads on the outside then it is hold in a mandrel which in turn is then fixed in the
jaws.

19
3 Vmc :
Haas VMCs feature high-performance vector drive spindles, high-torque brushless servos on all
axes, and rigid cast-iron construction. Configurations range from 40- and 50-taper gear-driven
models for high-torque, heavy-duty cutting, to Super Speed models with inline direct-drive
spindles to handle the most demanding high-speed machining operations.
Haas TM Series CNC Tool room Mills offer affordable entry into CNC, and provide an easy
transition from manual to CNC machining. They come standard with the Haas Intuitive
Programming System, a proprietary conversational programming system that makes set up and
operation easy – even without knowledge of G-code.
Every Haas VMC provides the features and performance you need – making it the best
investment you've ever considered, and providing more utility, flexibility, and productivity than
you've ever imagined.

Turning Center LMW LL

20
Turning is a machining process in which a cutting tool, typically a non-rotary tool bit,
describes a helix toolpath by moving more or less linearly while the workpiece rotates. The
tool's axes of movement may be literally a straight line, or they may be along some set of
curves or angles, but they are essentially linear (in the non mathematical sense). Usually the
term "turning" is reserved for the generation of external surfaces by this cutting action,
whereas this same essential cutting action when applied to internal surfaces (that is, holes, of
one kind or another) is called "boring". Thus the phrase "turning and boring" categorizes the
larger family of (essentially similar) processes known as lathing. The cutting of faces on the
workpiece (that is, surfaces perpendicular to its rotating axis), whether with a turning or
boring tool, is called "facing", and may be lumped into either category as a subset.

21
 5 )PRESSUER DIE CAST MACHINE

RAPID Cold Chamber Pressure Die-Casting Machines are manufactured under the guidance of
qualified and highly experienced engineers. The machines are built with best quality materials
and components.

The Machine can be operated on manual as well as semi-automatic basis and best suited for
mass production of Die-Cast Components (such as Automobile, Electricals, Toys, Measuring
Instruments & Home Appliances) for casting of Aluminum, Zinc & its alloys.

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Jig - Boring (S.I.P.)

The jig borer is use to make possible the location of hole centers quickly and precisely.It
resembles a specialized species of milling machine that provides tool and die makers with a
higher degree of positioning precision (repeatability) and accuracy than those general machines
had provided. Although capable of light milling, a jig borer is more suited to highly accurate
drilling, boring, and reaming, where the quill or headstock does not see the significant side
loading as it would with mill work. The result is a machine designed more for location accuracy
than heavy material remove.

Jig borers are limited to working materials that are still soft enough to be bored. Often a jig is
hardened; for a jig borer this requires the material to be bored first and then hardened, which may
introduce distortion. The jig grinder was developed as a machine with the precision of the jig
borer, but capable of working materials in their hardened state

Milling Machine -BFW-UF1

23
We use a milling machine to produce parts with straight edges, i.e. substantially rectangular
parts. These are often called “prismatic parts.” Any sort of drilled, bored, or tapped hole easily be
added to any face of the part. The milling machine is complementary to the lathe, whose parts
have a rotational axis of symmetry.

These enable machining complex parts almost completely in a single loading of raw material
into the machine. This eliminates manual refixturing when features must be added on different
part faces. . All axes may be programmed for simultaneous movement. The classic parts
produced on 5-axis machines are monolithic turbines and other finned rotors or very complex
prismatic parts with angled or curved features

Grinding Machine -

A grinding machine, often shortened to grinder, is any of various power tools or machine tools
used for grinding, which is a type of machining using an abrasive wheel as the cutting tool. Each
grain of abrasive on the wheel's surface cuts a small chip from the work piece via shear
deformation.

Grinding is used to finish workpieces that must show high surface quality (e.g., low surface
roughness) and high accuracy of shape and dimension. As the accuracy in dimensions in
grinding is of the order of 0.000025 mm, in most applications it tends to be a finishing operation
and removes comparatively little metal, about 0.25 to 0.50 mm depth. However, there are some

24
roughing applications in which grinding removes high volumes of metal quite rapidly. Thus,
grinding is a diverse field.

Grinding machines remove material from the work piece by abrasion, which can generate
substantial amounts of heat. To cool the work piece so that it does not overheat and go outside its
tolerance, grinding machines incorporate a coolant. The coolant also benefits the machinist as the
heat generated may cause burns. In high-precision grinding machines

Lathe Machine

Machining is one of the most important material removal methods in the technology of
manufacturing. It is basically a collection of material working processes that involves other
processes such as drilling, shaping, sawing, planning, reaming, and grinding among others.
Machining is practically a part of the manufacture of all metals and other materials such as
plastics, and wood as well. An important machine that is useful in machining is the lathe
machine.
A lathe machine is generally used in metalworking, metal spinning, woodturning, and glass
working. The various operations that it can perform include the following: sanding, cutting,
knurling, drilling, and deforming of tools that are employed in creating objects which have
symmetry about the axis of rotation. Some of the most common products of the lathe machine
are crankshafts, camshafts, table legs, bowls, and candlestick holders

25
Drilling Machine –

Machine used for drilling holes in various materials or fastening various materials together with
the use of fasteners. The attachment is gripped by a chuck at one end of the drill and rotated
while pressed against the target material. The tip, and sometimes edges, of the cutting tool does
the work of cutting into the target material. This may be slicing off thin shavings (twist drills or
auger bits), grinding off small particles (oil drilling), crushing and removing pieces of the
workpiece (SDS masonry drill), countersinking, counter boring, or other operations. Drills are
commonly used in woodworking, metalworking, construction and do-it-yourself projects.
Specially designed drills are also used in medicine, space missions and other applications.

26
 Study of Inventory Management

Concept of Inventory Management

 Inventory Management

What do you mean by inventory?

The raw materials, work-in-progress goods and completely finished goods that are considered to
be the portion of a business’s assets those are ready or will be ready for sale. Inventory
represents one of the most important assets that turnover of inventory represent one of the
primary sources of revenue generation and subsequent earnings for the company’s shareholders/
owners.
“Management of Inventories” is with the primary objective of determining, controlling stock
levels within the physical distribution function to balance the need for product availability
against the need for minimizing stock holding and handling costs.
A subsidiary ledger which is usually used to record the details of individual items of stock
Inventories can also be used to hold the details of other assets of a business. There are three types
of inventory: Raw materials, work in process and finished goods. Raw materials are materials
and components that are inputs in making final products. Work in process also called stock in
process refers to goods in the intermediate stages of production finished goods consist of final
products that are ready for sale .inventory represents the second largest asset category for
manufacturing companies next only, to plant and equipment he proportion of inventory to total
assets generally consists of 15 to 30 percentage.
Inventories is a list of goods available in stock at warehouses .it is also use for a list of contains
of a household and for a list of testamentary purpose of the possession of someone who has died
in accounting inventory consists as assets.

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 Nature of Inventories
Inventories are classified according to uses and point of entry in the alteration is as follows:
· Raw material
· Work in process goods,
· Finished goods

Raw Material Work in process Finished Goods

 Raw Materials
Raw materials are those units that are converted into finished production through manufacturing
process. Raw material inventories are those units which have been purchased and stored for
future.
 Work in Process goods
It is also called stock in process. It refers to goods in the intermediate stage of production. These
inventories are semi-finished products. It presents the products that need more work before they
become finished product for sale.

 Finished goods

Finished goods consist of final products that are ready for sale. Finished goods are those
completely manufacturing products which are ready for sale. Stock of material and work in
process facilitate production, while stock of finished goods is required for smooth marketing
operation. Thus inventories serves as a link between production and consumption of goods.

Objective of the Inventory Management

28
 The basic responsibility of the financial is to make sure the firm’s cash flows are managed
efficiently. Efficient management of inventory should ultimately result in the maximization of
the owner’s wealth. It was indicated that in order to minimizes cash requirements, inventory
should be turned over as quickly as possible, avoiding stock-outs that might result in closing
down the production line or lead to a loss of sales.

The main objective of inventory management consists of two parts.

1. To minimize investment in inventory.

2. To meet demand for the product by efficiently organizing the production and sales operations.

The firm should minimize investment in inventory implies that maintaining inventory involves
costs, such that the smaller the inventory, the lower is the cost to the firm. But inventory also
provide benefits to the extent that facilitate the smooth functioning of the firms.

Why Inventory Management?

An increased emphasis on liquidity has lead businessman to hold cash and securities in
performance to inventories. Inventories are now often referred to as the grave yard of the
business.
The surplus of the stock has been a principal guide of failure thus lead to change their view
regarding holding of inventories and adopt scientific way of inventory holding.

Following are factor that are following the view of scientific inventory control.

Size of Business
The increased size of business establishment has played an important role in modern large scale
enterprise. Often it operates with small profit margin which can be eliminated by scientific
inventories control method.

Wide variety and complexity

The wide variety and complexity in modern technology requires conscious inventory
management. If larger the range of requirement then creates the complexity.

29
 Urgency in material requirements

The need and importance of inventories varies in different production with the ideal time, cost of
men, machinery and urgency of requirement. But it is highly uneconomical to keep a secure and
a rapid capital turnover and the most effective means of achieving these objectives is to control
stores.

 Factors Influencing Inventory Management Decision

There two types of factors. They are external and internal factor which influence decision
making for inventory in an organization. The external factor arises from market conditions,
credit availability and government regulation. The external factors are not controllable easily
while internal factor are controllable with effective inventory management.

Following are the factors influence the inventory decision of an organization

Relevant Cost

The inventory problem is one of the balancing costs, so that total cost is minimized. Their costs
are:

Cost of Ordering

The activities that are carried out for fulfilling the need for material, which consume executive
time, stationary and communication charges, these are the cost of ordering.

Cost of Carrying out Inventories:

The moving factor to control inventory is the cost incurred by holding. It is the cost that is
expressed as percentage of the average investment i.e. capital investment, spoilage insurance
cost.

30
Material Control Techniques

The concept of material control techniques signifies the efficiency of any organization. The
contingent upon having the right material of right quality at right quantity at the right time in
following three areas:

1. Purchase Control
2. Storage Control
2. Warehouse Accounting

Purchase Control

This is one of the basic functions of inventory management and forms a major part of it. It needs
considerable expertise not only negotiating but also in the techniques of competitors and
studying of economic trends in respect of materials to be purchased in large quantity to increase
the profit.

Objectives of Purchasing:
1. To maintain continuity of production
2. To contribute to the competitiveness of the product
3. To contribute towards higher productivity
4. To increase profit
5. To contribute towards standardization, variety reduction, value analysis.

Storage Control

The control of materials when it is in storage is affected through what is known as the perpetual
inventory. Thus two main functions of the perpetual inventory system have been studied which
are

31
 1. Receipt and Issue System,
2. Maintenance of Store Records

Warehousing System and Procedure

The procedure comes into operation immediately on receipt of dispatched documents or

dispatched intimation in the stores and covers on the activities i.e. clearance, delivery, inspection,
stock charging and preservation, issue and return of materials by the ends after striking out
balance from the stock card and delivery of the account department.

Determination of Inventory Level:

The inventory level concept consider store keeping as profit intensive service to production store
keeping should contribute directly to profitability and be concerned with matter as flow, packing
and dispatch.
There are various levels of stock which are established by the Fluid Control are as follows:
(1) Minimum Level
(2) Maximum Stock Level
(3) Average Stock Level
(4) Re-order Stock Level

ABC Analysis
In most of the inventories a small proportion of items account for a very substantial usage and
large proportion of items accounts for a very small usage. ABC analysis, based on this empirical
reality, advocates in essence a selective approach to inventory control which calls for a greater
concentration of efforts on inventory items accounting for the bulk of usage value.

ABC classification is a basic analytical management tools which enable top management to
direct their efforts where the result will be maximum. This technique properly knows as
“ALWAYS BETTER CONTROL” has universal application in many areas of human endeavor.

32
The techniques tires to analyze the distribution of any characteristic by money value of
importance in order to determine its priority.

Class A Class B Class C Class

Items value 70% 20% 10%

Number of items 10% 20% 70%

ABC Analysis

VED Analysis
VED stands for vital, essential and desirable. This analysis relates to the classification of
maintenance spare parts and denotes the essentiality of stocking spares.

The spares are split into three categories in order of importance. From the view-points of
functional utility, the effects of non-availability at the time of requirement or the operation,
process, production, plant or equipment and the urgency of replacement in case of breakdown.

Some spares are so important that their non-availability renders the equipment or a number of
equipment in a process line completely inoperative, or even causes extreme damage to plant,
equipment or human life.

On the other hand some spares are non-functional, serving relatively unimportant purposes and
their replacement can be postponed or alternative methods of repair found. All these factors will
have direct effects on the stocks of spares to be maintained.

Therefore, it is necessary to classify the spares in the following categories:

V:

33
Vital items which render the equipment or the whole line operation in a process totally and
immediately inoperative or unsafe; and if these items go out of stock or are not readily available,
there is loss of production for the whole period.

E:

Essential items which reduce the equipment’s performance but do not render it inoperative or
unsafe; non-availability of these items may result in temporary loss of production or dislocation
of production work; replacement can be delayed without affecting the equipment’s performance
seriously; temporary repairs are sometimes possible.

D:

Desirable items which are mostly non-functional and do not affect the performance of the
equipment.

As the common saying goes “Vital Few — trivial many”, the number of vital spares in a plant or
a particular equipment will only be a few while most of the spares will fall in ‘the desirable and
essential’ category.

However, the decision regarding the stock of spares to be maintained will depend not only on
how critical the spares are from the functional point of view (VED analysis) but also on the
annual consumption (user) cost of spares (ABC — analysis) and, therefore, for control of spare
parts both VED and ABC analyses are to be combined.

34
 Inventory Cycle

Material Planning

Material Purchansing &

Receiving

Material Storing

Material Issunig

Material Accounting

35
Material Planning

o Centralized Purchased.
o Classification and codification
o Standardization and Simplification
o Types of storing
o Fixation level
o Selective controls
 Material Purchasing & Receiving
o Requirements of materials
o Exploring supply
o Calling quotation
o Preparing comparative statement of quotation
o Select one of them
o Receiving and inspection
o Checking and passing bills for payments
 Material Storing
o Location and layout of storing
o Maintain store records, GRN
 Material Issuing
o Job order
o Issue transaction
o Update in ERP

36
 CHAPTER 5
DATA ANALYSIS AND INTERPRETATION

37
Data analysis and interpretation:
Total Inventory

Particular May 2018 June 2018 July 2018

Total inventory
368.52 523.48 474.06
value
Total Inventory

(Figures in lakh)

Total Inventory
600

500

400

300
Total Inventory

200

100

0
May June July

Total inventory

Interpretation-
The above chart indicates the amount of inventory with the company. The lower the amount the
higher will be the profit but higher the amount the lower will be profit. There is inverse relation
between profit and inventory. From the above chart it can be seen that in June 2018 the amount
of inventory is Rs. 523.48 due to which the profit also reduced and so the profit is low in June
2018 total inventory is highest in the month of May and lowest in the month April which indicate
that there are higher profits in month of May and in the month of June the profits are low.

38
 Stock of raw material

Particular April 2018 May 2018 June 2018

Raw material value 67.88 77.74 77.41
Raw Material

(Figures in lakh)

Stock of Raw Material

80

78

76

74

72

70 Stock of Raw Material

68

66

64

62
May June july

Stock of raw material

Interpretation-
It can be clearly observed in the above chart that the value of raw material has increased in the
month of June as compared to that of May.
In the month of July the value has decreased to 77.41 as compared to that of previous month
June i.e. 77.74.

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 Work in progress

Particular May 2018 June 2018 July 2018

Work in progress
55.53 57.14 60.33
value
Table 1 Work in Progress

(Figures in lakh)

Work in Progress
61

60

59

58

57
Work in Progress
56

55

54

53
may June july

Work in progress

Interpretation-
Above chart represent that, the value of work in progress was highest in month of July i.e. 60.33
May i.e. 6.77 and June i.e. 57.14)
From the above chart we can understand the work in progress of company continues increasing
but the profit depends on the expenditure.

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 Finished goods

Particular May 2018 June 2018 July 2018

Finished goods
20.18 120.94 41.21
value
Table 2 Finished Goods

(Figures in lakh)

Finished Goods
140

120

100

80

Finished Goods
60

40

20

0
May june July

Finished Goods

Interpretation-
The above chart represent that finish goods value has increased in the month of June i.e.120.94
as compared to that of May (i.e. 20.18) but the amount further decreased to 41.21 in the month of
July.In May is lowest as compared to the remaining months.

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 120

100

80
Value (Rs. Lakh)

60

40

20

0
May-18 Jun-18 Jul-18
Raw Material 67.88 77.74 77.41
Work in Progress 55.53 57.14 60.33
Finished Goods 20.18 102.94 41.21

Graph of Stock, Work in progress, Finished goods

Inventory Net Assets Ratio:-

The formula for calculation of this ratio is given below:

Inventory Net Assets Ratio=Stock / Working capital

Particular May 2018 June2018 July 2018

Stock 368.52 523.48 474.06
Working
143.60 255.84 137.79
Capital
Inventory Net
2.56 2.04 3.44
Asset Ratio

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Net Asset Ratio

The above table is been represented with the help of chart.

Interpretation:-
In the above table it is been observed that initially the inventory to net asset ratio was 2.56 and
then decreased to 2.04 in the May. Further it increased to 3.44 in the June, which indicates that
the inventory net asset ratio has a upward moving slope

Inventory Turnover Ratio:-

Inventory turnover is an efficiency ratio that shows how efficiently ratio that shows how efficient
inventory is managed by comparing sales with closing inventory for a period. This measures how
many times a company sold its total average inventory rupee amount during the year.
Company’s inventory turnover ratio at 2017 was 3.2. In 2018 inventory turnover ratio was 6.5.
This shows that continues growth in inventory turnover ratio takes p[lace.

Period 2016-17 2017-18

Inventory Turnover Ratio 3.2 6.5
Inventory turnover ratio

S
7
6.5
6

4
3.2
3 Turnover Ratio

0
2016-17 2017-18

Turnover ratio

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Interpretation:-

In the above data it can be clearly observed that there is a upward slope in the inventory turnover
ratio i.e. inventory turnover ratio is going on increasing year after year in the year 2016-17 it was
3.2 which went up to 6.5 in the year 2017-18

Inventory Holding Period:-

This formula is used to determine how quick a company is converting their inventory into sales.

The formula for calculation of theses ratio is given below:

Inventory Holding Period = 365 Days / Inventory Turnover Ratio

Particular 2016-17 2017-18

Days 365 365
Inventory
3.2 6.5
Turnover Ratio
Inventory
114.06 56.15
Holding Period
Inventory Holding Ratio

Interpretation:-
The above chart represent that days of inventory on hand is decreasing year after year in the year
2016-17the inventory on hand was 114.06 days which decreased to 56.15 days in the year 2017-
18, which indicate that company is moving its inventory fast. This could be a sign of high
demand for the products.

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 CHAPTER 6
SUGGESTIONS

45
Suggestions:
 Applying 5s system in organization
 Changing packing department from second floor to ground floor.
 Changing location of Quality department from second floor to ground floor.
 Minimize the outsourcing and start in-house of all the treatment.
 Consider inventory optimization tools
 Inventory optimization tools have been gaining ground as companies seek to evaluate their
entire network and determine the best inventory policies for each product at each node in
their supply chain. There are typically stand-alone software tools that use data from WMS
and ERP systems.
 Currently company uses FIFO method. It’s better to use LIFO rather than FIFO because the
materials which are purchased recently that only further passed. The materials which are old
they are not used for manufacturing process. Old material may cause corrosion and
therefore sometime order returns.
 Keep an eye on your suppliers. There are suppliers that don’t necessarily stick to their
schedule or deliver on their commitments
 Track essential attributes. Over the past few years, tracking product genealogy and
traceability are at the top of inventory managers must-have lists.
 Raw material should be stored such type it is categories on basis of material type and then it
is kept in store in a specific manner. For example forge material of specific type kept at
particular section that is all brass materials kept in one place and distinguished on the basis
of their size and dimensions. It can easy to understand.
 One day inspection- This is for effective use of recourses. In every month, at specific day
(like 2nd Sunday) company should take inspection for store. Just because of inspection
company can understand exact available material and some non moving material. Inspection
done by respective head and collected data can update in ERP system.
 There is no specific place for finished goods. For storing finished goods there should be
keep one specific place.
 Store arrangement for forge
 Vendor development to minimize load of in house production.

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CHAPTER 7
LEARNING

47
Learning:
 The purpose of this internship was this to get exposed to real work environment and get
some knowledge through hands on observation.
 Another objective of the internship was to develop more communication and
management skills.
 Proper list of all things I had to do in the month of internship was provided. It started
with knowing about the whole structure of the company, then the products.
 How to read drawing which machining is required first.
 How to use ERP system in company that I learn there.

 The manufacturing of the different automotive parts was learned .Learned how different
depts. like the planning , production, design, purchase, store all work together in proper
tandem and coordination to provide the customer with the product before the deadline.
 Conversion of raw material into a finished good was studied. Thus it was a very fruitful
internship for me. I was able to achieve some of the objectives of an industrial internship
and hope will be able to achieve more in further internships.

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