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A Study on Inventory Management
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Paavai Engineering College Chettinad Cement
Corporation Limited

ABSTRACT
The purpose of inventory management is to ensure availability
of raw material insufficient qualities as and when required and
also minimize investment in inventories. There isan essential to
manage inventories efficiently and effectively in order to avoid
excess investment.It is possible for a company to reduce the
level of inventories to a considerable extent withoutany adverse
effect on production and sales by using simple inventory
planning and controltechniques. The reduction of excessive
inventories will create a favorable impact on the
companyprofitability. Inventory turnover ratio, inventory
conversion period are very helpful to know howeffectively
plays and control in the organization EOQ analysis will enables
the organization touse of EOQ analysis is very effective and
useful tool for classifying, monitoring and control
of inventories.


Paavai Engineering College Chettinad Cement
Corporation Limited

CHAPTER-IINRODUCTION


Paavai Engineering College Chettinad Cement
Corporation Limited

1.1
ABOUT THE STUDY
Inventory management is primarily about specifying the size
and placement of stockedgoods. Inventory management is
recurred at different locations within a facility or withinmultiple
locations of a supply or network to protect the regular and
planned course of productionagainst the random disturbance of
running out of materials or goods. The scope of
Inventorymanagement also concerns the fine lines between
replenishment lead time, carrying costs of inventory, asset
management, Inventory forecasting, physical inventory,
available physical spacefor Inventory, quality management,
returns and defective goods and demand and forecasting.
Types of inventory
Normally the inventory has divided into two types. These,1.

Merchandising inventory,2.

Manufacturing inventory.The manufacturing inventory has
been subdivided into three types. These,
1.

Raw materials,
2.

Work in process,
3.

Finished goods.


Raw materials:

Everything the crafter buys to make the product is classified as
rawmaterials. That includes leather, dyes, snaps and grommets.
The raw material inventoryonly includes items that have not yet
been put into the production process.


Work in process:

This includes all the leather raw materials that are in various
stages of development. For the leather crafting business, it
would include leather pieces cut and inthe process of being
sewn together and the leather belts and purse etc. that are
partiallyconstructed.


Paavai Engineering College Chettinad Cement
Corporation Limited

In addition to the raw materials, the work in process inventory
includes the cost of thelabor directly doing the work and
manufacturing overhead. Manufacturing overhead is acatchall
phrase for any other expenses the leather crafting business has
that indirectlyrelate to making the products. A good example is
depreciation of leather making fixedassets.


Finished goods:

When the leather items are completely ready to sell at craft
shows orother venues, they are finished goods. The finished
goods inventory also consists of thecost of raw materials, labor
and manufacturing overhead, now for the entire product.
1.2

SCOPE OF THE STUDY
The study helps the management to improve its profitability
through a reduction in non-moving inventory.It develops the
policies for both continuous review of inventory management
system
.
The study helps to show the level of the inventory in the
organization. The company willmake the proper inventory
methods from the suggestions of the study.

1.3 STATEMENT OF THE PROBLEM
There are a number of problems that can cause havoc with
inventory management. Somehappen more frequently than
others. Here are some of the more common problems
withinventory systems.

Unqualified employees in charge of inventory
,
Using a measure of performance for theirbusiness that is too
narrow, Not identifying shortages ahead of time
,
Bottlenecks and weak pointscan interfere with on-time product
delivery, Too much distressed stock in inventory,
Excessiveinventory in stock and unable to move it quickly
enough, Computer assessment of inventoryitems for sale is
inaccurate, Computer inventory systems are too complicated
,
Items in-stock getsmisplaced
,
Not keeping up with the rising price of raw materials.



Paavai Engineering College Chettinad Cement
Corporation Limited

1.4 OBJECTIVES OF THE STUDY


To analyze the inventory those are sufficient to perform
production and salesactivities smoothly.


To study the inventory management followed in chettinad
cement.


To identify the existing inventory management and
its effectiveness.


To calculate analysis for their performance in inventory
management.
1.5 RESEARCH METHODOLOGY
Research Design
The Descriptive type of research has been applied in the study
. This research theresearcher has no control over the variables.
Only reports what has happened or what ishappening. The
research can only discover causes but cannot control
the variables
.
Data collection
This study purely based on secondary sources of information.
The necessary datacalculated from annual report, books,
journals and websites.
Period of study
This study covers a period of five years from 2006

2007 to 2010

2011. Theaccounting year commenced from April and ending
with March of the next year.

Area of study

This study was conducted in Chettinad cement corporation
limited, Puliyur, KarurDistrict.



Paavai Engineering College Chettinad Cement
Corporation Limited

Tools for analysis
The following tools have been applied in the present study.They
are listed below


Ration analysis (inventory) and


EOQ analysis
Ratio Analysis (Inventory)
The percentage of a mutual fund or other investment vehicle's
holdings that havebeen "turned over" or replaced with other
holdings in a given year. The type of mutual fund, itsinvestment
objective and/or the portfolio manager's investing style will play
an important role indetermining its turnover ratio.
Economic Order Quantity (EOQ)

Economic order quantity is that level of inventory that
minimizes the total of inventory holding cost and ordering cost.
The framework used to determine this order quantity isalso
known as Wilson EOQ Model. The model was developed by F.
W. Harris in 1913
.
The mosteconomical quantity of a product that should be
purchased at one time. The EOQ is based on allassociated costs
for ordering and maintaining the product. EOQ refers to the size
of the orderwhich gives maximum economy in punches of
materials.

Where







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