ASSIGNMENT

ON
“INVENTORY MANAGEMENT SYSTEM IN
BANGLADESH”

SUBMITTED TO
Mr. ShakirHossainAkand
Lecturer
Dhaka City College

SUBMITTED BY
Batch: 17th
Section: C
Department of Business Administration
Dhaka City College

Date of Submission: 20.01.2018

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 ‘NAME OF GROUP MEMBERS’

SERIAL NO. NAME COLLEGE ID

1. Tasnim Kabir 206
2. Mahmudul Haque 207
3. Shirin Akter Shathi 208
4. Meraz-ul-islam 209
5. Sharmin Chowdhury 211
6. Nazmul Bhuiyan 212

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INVENTORY:
Inventory is the raw materials,work-in-process products and finished goods that are
considered to be the portion of a business's assets that are ready or will be ready for sale.
Inventory represents one of the most important assets of a business because the turnover of
inventory represents one of the primary sources of revenue generation and subsequent
earnings for the company's shareholders.Inventory is generally the largest current asset –
items expected to sell within the next year – a company has.

INVENTORY MANAGEMENT SYSTEM:

“Inventory Management System” is a database system to manage for Small and Medium
Enterprise. This system wake to provide service facility to the Small and Medium Enterprise
and also to the customer. The services that are provided is ordering and bill information of
the customer through the database, customer information management and salesman
information management,product information management and report. Main objective build
the system is to provide ordering and billing easily to the customer. With this system ordering
and billing management will become easier and systematic to replace traditional system
where some are still using paper. Furthermore, this system is applicable anytime and
anywhere. Furthermore,this project will develop for inventory management and enhance
business system.Others,this project to facilitate customer for make faster ordering and
counting inventory.

INVENTORY MANAGEMENT SYSTEM IN BANGLADESH:

Good inventory management is indispensable to the successful operation of most

organizations for a number of reasons. One is the amount of money inventory represents;
another is the impact that inventories have on the daily operation of an organization.In
Bangladesh many manufacturing firm carries different types of inventories including raw
materials, work-in- process and finished goods as well as spare parts for machines tools and
other supplies. Inadequate control of inventories can result in both under and overstocking of
items. Under stocking results in missed deliveries lost sales, dissatisfied customers,
production bottlenecks and overstocking unnecessarily ties up funds that might be more
productive elsewhere. Inventory management has two main concerns. One relates to the level
of customer service that is to have the right goods, in sufficient quantities, in the right places

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and at the right time. The other relates to the cost of ordering and carrying inventories. The
overall objective of inventory management is to achieve satisfactory level of customer service
while keeping inventory costs within reasonable bounds.

FEATURES OF INVENTORY MANAGEMENT SYSTEM:

Inventory management system is made up of several key components working together to

create a cohesive inventory of many organizations' systems. These features include:

 PRODUCT: Defines product’s unique identity.

 ORDER: Defines new orders for a product.
 SUPPLIER: Defines unique identity of a supplier who supplies product to company.
 SALESMAN: Defines Company’s deployed employee.
 INVENTORY: How much product still in stock.
 CUSTOMER: Defines information about customers.

OBJECTIVES OF INVENTORY MANAGEMENT:

The objective of this system is to keep track and report changes in product inventory. This
system tries to simulate product inventory and sales management. Available products
quantity which is ready to sell tweaks in two ways. It surges in number when some supplier
supplies products and company accepts the supply. On the other hand available products
quantity drops when some salesman sell products to some customers. These two are the entry
point of the system. When some suppliers supply products, Product table keeps it as a new
entry and if the product is of a new type or of a new category the Product table keeps track of
these. All these changes are related to increment of available products. On the other hand,
available quantity of product declines when some customers purchase product from the
company.Some salesmen, who represent the company to the customer, works under a
Manager and sell the product to customer, Hence this operation results in the system in two
different ways. Decline in available product, increase in sales by the salesman on behalf of
the company. These changes are kept in product and inventory table.

The objective of inventory management is to achieve required levels of production while

keeping inventory costs within reasonable bounds.

a) Overall Objectives:

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  To utilize the full capacity of the factory, production is running for twenty-four hours
a day and 350 days a year that minimizes overhead. So stock should be such that the
factory will never close down due to lack of raw materials. On the other hand, over
stock is not expected, as it will affect the working capital.
 A series of processes are required to produce product. It is not possible to start the
next phase before completing the previous one. In case of mechanical disturbance of
one machine, the next one will stop if sufficient WIP materials are not in the stock.
 The company is hundred percent export-oriented. So, in time delivery is very
important. Otherwise, the buyers will cancel export contract. So, product should be
stored to meet the customer’s requirement.
 The company used to go to production under particular order. Usually buyers require
different types of quality goods or product. So in case of stocking raw materials, it
must be considered that no particular material will be in the store for a long time.

b) Specific Objectives

 Explaining the Inventory Management System and company

 To identify the efficiency of recording system
 To give a brief overview of company
 To analyze the inventory management and forecast & recommend the future policy
 To know about the procedures Inventory Management System
 Determining the drawbacks of the existing system
 To understand the flow of documents of each inventory
 To provide some recommendations on the basis of my findings

TYPES OF INVENTORY MANAGEMENT:

Like all other assets, inventory represents a costly investment to the firm. In order for this
investment to be worthwhile there must be some advantage in making it. Those reasons vary
with the type of inventory carried. For purpose of discussion I will use the accountant's
convention of dividing inventory into three types:

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Raw Material Inventory:

 Having an available stock of raw materials inventory make production schedule

easier.
 To keep raw materials inventory is to avoid price changes
 Keep extra raw materials inventory to hedge against supply shortages.

Work-In-Process Inventory:

 Keep work-in-process inventory beyond minimum level to Buffer production.

Finished goods Inventory:

 Keep finished goods inventory to provide immediate service.

 Keep finished goods inventory to Stabilize production

Valuing Inventory:
Accountants value inventory using one of the three methods. The first-in, first-out (FIFO)
method says that the cost of goods sold is based on the cost of materials purchased the
earliest, while the carrying cost of remaining inventory is based on the cost of materials
bought the latest. The last-in, first-out (LIFO) method states that the cost of goods sold is
valued using cost of materials bought latest, while the value of remaining inventory is based
on materials purchased earliest. The weighted average method requires valuing both
inventory and the cost of goods sold based on the average cost of all materials bought during
the period.

TERGET USER:

The countrywide small and medium entrepreneur who has regular transaction can use this
application.

SUCCESSFUL INVENTORY MANAGEMENT:

Effective Inventory Management enables an organization to meet or exceed customer’s

expectations of product availability while maximizing net profits or minimizing costs.
Inventory management should be successful when it able to balance the total costs of

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inventory and the return after using that inventory. For a successful inventory management
we should consider the following issues:

 We should try to Increase inventory turnover but we should not sacrifice the service
level of our organization,
 We should keep our stock low without sacrificing any services or performances,
 We should obtain inventories with lower prices by making volume purchases but not
ending up with slow-moving inventory,

For example, computing the inventory turnover ratio is a simple measure of managerial
performance. This value gives a rough guideline by which managers can set goals and
evaluate performance, but it must be realized that the turnover rate varies with the function of
inventory, the type of business and how the ratio is calculated (whether on sales or cost of
goods sold). Average inventory turnover ratios for individual industries can be obtained from
trade associations.

MANUFACTURING INVENTORY:

Manufacturers primarily use inventory management software to create work orders and bills
of materials. This facilitates the manufacturing process by helping manufacturers efficiently
assemble the tools and parts they need to perform specific tasks. For more complex
manufacturing jobs, manufacturers can create multilevel work orders and bills of materials,
which have a timeline of processes that need to happen in the proper order to build a final
product. Other work orders that can be created using inventory management software include
reverse work orders and auto work orders. Manufacturers also use inventory management
software for tracking assets, receiving new inventory and additional tasks businesses in other

industries use it for.

THE PURCHASING PLAN:

One of the most important aspects of inventory control is to have the items in stock at the
moment they are needed. This includes going into the market to buy the goods early enough
to ensure delivery at the proper time. Thus, buying requires advance planning to determine
inventory needs for each time period and then making the commitments without
procrastination. For retailers, planning ahead is very crucial. Since they offer new items for
sale months before the actual calendar date for the beginning of the new season, it imperative

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that buying plans be formulated early enough to allow for intelligent buying without any last
minute panic purchases. The main reason for this early offering for sale of new items is that
the retailer regards the calendar date for the beginning of the new season as the merchandise
date for the end of the old season

INVENTORY CONTROL SYSTEM:

The chief motive of an organization is ‘Profit Maximization’. Inventory is an essential part of
an organization since it is one of the major factors that affect the profit earned by the
organization. Hence controlling or managing inventory is one of the most important tasks
necessary to achieve organizational goal of earning maximum profit and reducing costs and
expenses.
Inventory Control is a technique of maintaining and monitoring the size of the inventory at
appropriate level, so that the production and distributions take place effectively.
The main objective of inventory control is to achieve maximum efficiency in production and
sales with the minimum investment in inventory. Inventory Control is achieved by:
 Purchasing items at proper time and price, and in right quantity.
 Provision of suitable storage locations with sufficient space.
 Maintaining proper level of stocks.
 Adequate inventory identification system.
 Up-to-date and accurate record keeping.
 Appropriate requisition procedures.

FIGURE OF INVENTORY MANAGEMENT SYSTEM:

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KEY FUNCTION:

The key functions of the inventory management system are:

 To ensure material is available i.e. maintain appropriate level of inventory in the

warehouse;
 Receipts, custody, and issue of materials;
 To recording the recording of all the stock movements;
 To minimize investment in inventory
 Assist in devising Management Report

INVENTORY CONCERN:

Inventory management system has two main concerns.

1. One relates to the level of customer service, and at the right goods, in sufficient quantities,
in the right place, and at the right time.

2. The other relates to the cost of ordering and carrying inventories. As a hundred percent
manufacturing company

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VARIOUS INVENTORY:

There are several types of inventory. These discuss as follows.

Normal Inventory:

This is inventory required to support the normal replenishment process under conditions of
certainty. If demand and lead times are consistent, normal inventory is what the organization
needs to meet customers demand at a given point in time. This type of inventory should
generally be as close to zero as possible. However, this may not happen due to transportation,
production, and distribution in economics of scale.

Safety Inventory:

Surplus inventory that a company holds to protect against the uncertainty in demand, in lead
times and in quality of supply.

Pipeline Inventory:

Inventory moving from point in the materials flow is called pipeline inventory.This type of
inventory will either belong to the shipper or to the customer depending on the terms of sale.

Speculative Inventory:

This type of inventory is held other than meeting current demand. For example, the company
may decide to buy and stock more than it needs in the event that it forecast that prices of
materials will rise or suppliers offers lower price if a large quantity is purchased at one time.

Seasonal Inventory:

If the majority of sales occur in relatively short project of time. Companies may stock
seasonal inventory to stabilize production over a more extended period of time and maintain
labor force capacities.

Dead inventory:

No one wants this type of inventory but it is held for a verity of reasons. Say if company
expects demand may create after long time or it may cost more to dispose of than it does to
keep. Sometimes to met occasional needs of customers. It is kept as a gesture of goodwill.

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STEPS OF INVENTORY MANAGEMENT:

To reduce production costs largely depend on right and efficient inventory management. So,
sound and efficient inventory management is expectable to each manufacturing organization.
Inventory management started from purchase of materials to conversion of finish goods or
storage goods available for sales. The steps of inventory management has given as follows,

 Purchase of Materials.
 Storing of Materials.
 Issuance or Utilization of Materials.
 Materials stock or Inventory control.
 Accounting for Materials &Cost control.

INVENTORY RECORD SYSTEM:

Practically all inventory systems have certain common characteristic of record maintenance.
These aims to show what are on hand, where it is located, and what future stock may be
anticipated. For each items of inventory, it should thus be

I. Storage location
II. Quantity on hand at the start of a period.
III. Additional stock on order or en route, stock committed to production or sales.
IV. Stock distributed, such as to production, to ware house, to various outlet, or to
customers.
V. Balance on hand at the end of a period (that is ,the beginning quantity of the next
period )

One of the major steps of material management is to proper store of materials. Some
organizations not only store the materials supplied by others but also the materials produced
by them. The materials receiving department unload all materials and send it to the store after
necessary checking and experiment. Store conservator compares the materials with Material
Receiving Report or Goods Received Note-GRN and then he sore the materials in the store.
In some emergency case materials directly send to the production department without entry
to the store. In such case store conservator directly go to the production department and take
necessary notes. To easy to identify storing materials, materials are separated following items

 Metal materials

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  Non metal materials
 Decomposed materials
 Chemicals
 Oil and Lubricant
 Accessories

One of the major responsibilities of store conservator is to send materials in according to

materials requisitions.

COMPONENTS OF INVENTORY MANAGEMENT SYSTEM:

 Barcode Scanner
 Barcode Printer
 Inventory Software

DEVELOPMENT OF INVENTORY MANAGEMENT:

In recent years, two approaches have had a major impact on inventory management: Material
Requirements Planning (MRP) and Just-In-Time (JIT and Kanban). Material requirements’
planning is basically an information system in which sales are converted directly into loads
on the facility by sub-unit and time period. Materials are scheduled more closely, thereby
reducing inventories, and delivery times become shorter and more predictable. Its primary
use is with products composed of many components. MRP systems are practical for smaller
firms. The computer system is only one part of the total project which is usually long-term,
taking one to three years to develop. Just-in-time inventory management is an approach
which works to eliminate inventories rather than optimize them. The inventory of raw
materials and work-in-process falls to that needed in a single day. This is accomplished by
reducing set-up times and lead times so that small lots may be ordered. Suppliers may have to
make several deliveries a day or move close to the user plants to support this plan

SUMMARY:
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Why users should use the system that you have designed-

The main goal of the inventory management System is:

1) Order management;

2) Customer information;

3) Bill management;

4) Product identification;

5) Inventory optimization.

Inventory management system database is developed to overcome all the current problems .
As today people are digitalizing day by day a complete inventory database system is
mandatory. For taking the business to the next level our designed database system is very
effective. However there are lots of scope to improve the performance of this management
system .Its user friendly and also saves time. This database system hopefully will make a new
era to the inventory business.

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