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Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is longer than delivery delay, and also to ease the effect of imperfections in the manufacturing process that lower production efficiencies if production capacity stands idle for lack of materials. The most important objective or inventory control is to determine and maintain an optimum level of investment in the inventory. Most companies have now successfully installed one or the other system of inventory planning and control. Inventory Management and Inventory Control must be designed to meet the dictates of the marketplace and support the company's strategic plan. The many changes in market demand, new opportunities due to worldwide marketing, global sourcing of materials, and new manufacturing technology, means many companies need to change their Inventory Management approach and change the process for Inventory Control. Despite the many changes that companies go through, the basic principles of Inventory Management and Inventory Control remain the same. Some of the new approaches and techniques are wrapped in new terminology, but the underlying principles for accomplishing good Inventory Management and Inventory activities have not changed. The Inventory Management system and the Inventory Control Process provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities, and communicate with customers. Inventory Management and the activities of Inventory Control do not make decisions or manage operations; they provide the information to Managers who make more accurate and timely decisions to manage their operations.

The basic building blocks for the Inventory Management system and Inventory Control activities are: Sales Forecasting or Demand Management Sales and Operations Planning Production Planning Material Requirements Planning Inventory Reduction The emphases on each area will vary depending on the company and how it operates, and what requirements are placed on it due to market demands. Each of the areas above will need to be addressed in some form or another to have a successful program of Inventory Management and Inventory Control.


There are the four major reason for holding inventories.

1. TRANSACTION PURPOSE : Which emphasized the need to maintain inventories to smoothen production and sales operations, which is for the day-to-day use.

2. SAFETY PURPOSE : Which necessities holding of inventories to guard against the risk of unpredictable changes in the market.

3. SPECULATIVE PUROSE : There is a speculative element which influences the decision to increase or decrease Inventory levels to take advantage of price change.


Inventories can be classified in terms of its different uses, which will enable one to appreciate the peculiarities and problems in its uses. Secondly the differentiation based on uses of inventories will enable one to adopt control techniques to suit the needs

Inventories are classified according to uses and point of entry in the alteration is as follows: 1. Raw Material

2. Spares and Consumables

3. Work in Process Goods and

4. Finished Goods

RAW MATERIALS: Raw materials are those basic input materials that are converted into finished product through manufacturing process. The importance of raw materials can be easily visualized when any break in its supply will keep the production lines ideal. There are two important factors, which determine the size of raw materials Inventory.

a) Consumption rate and

b) Importance of item.

CONSUMABLES & SPARES: A Consumables : There are the materials which at as catalysis in the production process and are not directly found in the output. This enables the production process to function smoothly. Fuel, oil etc are the example consumables.

B Spares : Spares from an importance class of inventories by themselves. Then consumption pattern defers from that of raw materials, consumables and finished goods, consequently the stocking polices are different necessitating special methods for solving their peculiar Inventory problems.

Spare parts can be classified as routable spares, insurance spares, capital spares, maintenance spares and over handling spares etc.

WORK IN PROCESS GOODS: They represent products that need more work before they become finished products for sale. Work in process goods acts as a buffers within the manufacturing sub-system, which may consist of group of machines and assembly lines, i.e. work centers. The raw material passes through the work centers for final production. The greater the period of process, there will be more amount of manufacturing activities.

FINISHED GOODS: Finished Goods Is The Final Or Stable Product. Which act as a buffer between the production department marketing dept. the level of inventory depends on the production and behavior of the market. Normally These Inventories Are Controlled By The Marketing Dept.


A study in New tech engineering works was carried out taking into consideration the concept of total material control, which significant that efficiency of any organization is contingent upon having the right material of right quality or right place in the right quantity at the right time and place.

To study the Inventory Management the several of interview techniques depending on the situations were followed. Discussions were carried out with various personnel of the company to study the following 3 broad areas. 1. PURCHASE CONTROL


To study the above a relationship and link was sought between theory and practice. An evaluation was done to each stage and suggestions were also made to improve the existing Inventory control system.

PURCHASE CONTROL Purchasing is one of the basic functions of Inventory Management and forms a major part of it. What to buy, when to buy, where it buy, how much to buy, how much to pay and how much to stock are the fundamental of the Inventory control. It also involves creative functions such as development of new resources, introducing new materials and sources in the undertaking etc. It needs considerable expertise not only negotiating but also in the techniques of competition and studying of economic trends in respect of materials to be purchased in large quantity. Every rupee saved by the good purchasing goes directly in to the profit for the simple reason is that it is not spent at all.


The control of materials while 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:


Receipt and issue system, and


Maintenance of store records.

And also the use of Inventory control techniques have been evaluated considering existing position of NEW-TECH ENGINEERING WORKS.