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Project Report
On
Ex-PGDM (2015-16)Group 3
Azad Kumar (07)
Chanthy Prom(10)
Deepak Abraham (12)
Rahul Gupta (24)
Samarjit Singha (29)
Chhunhak Ven (11)
Table of Contents
Sl.no
1
2
3
4
5
6
7
8
9
Contents
Page no.
Introduction
Literature Review
Problem Statement
Research methodology
Data analysis and interpretation
Result and Discussions
Conclusion
Limitations of the study
References
INTRODUCTION
3
5
7
8
9
16
17
18
19
Every organization needs inventory for smooth running of its activities. It serves as a
link between production and distribution processes. The investment in inventories constitutes the
most significant part of current assets/working capital in most of the undertakings. Thus, it is very
essential to have proper control and management of inventories. The purpose of inventory
management is to ensure availability of materials in sufficient quantity as and when required and
also to minimise investment in inventories. Raw materials, goods in process and finished goods
all represent various forms of inventory. Each type represents money tied up until the inventory
leaves the company as purchased products. Because of the large size of the inventories
maintained by firms, a considerable amount of funds is required to be committed to them. It is
therefore absolutely imperative to manage inventories efficiently and effectively in order to avoid
unnecessary investments.
In our project, we have selected to study washing machine components inventory
management of Whirlpool at Faridabad. Whirlpool Corporation is the worlds leading
manufacturer and marketer of major home appliances. Whirlpool Corporation is the worlds
leading manufacturer and marketer of major home appliances. Washing Machines, Dryer, Dishwashers, Refrigerators, Freezers, Cookers, Micro-wave Ovens, Room air-conditioners, Small
Kitchen Appliances, etc. Whirlpool of India Limited, a fully owned by Whirlpool Inc, US, ($12
billion), a leading global consumer durable player. Whirlpool of India limited manufactures and
markets refrigerators and washing machines.
Whirlpool has invested heavily in its manufacturing facilities in India. While the factories
in Faridabad and Pondicherry have been upgraded to meet the exacting world class standard of
Whirlpool, the one under the construction at Ranjangaon, Pune will set the standards as one of
the worlds front runners in environmental sensitive and eco-friendly manufacturing units.
The refrigerator facilitated at Faridabad in Haryana manufactures direct cool. Infusion of
technology and up gradation of machinery along with streamlining of processed has enhanced the
plant capacity from 7,00,000 units to 8,50,000 units annually. Whirlpools focus at this plan in on
manufacturing refrigerators that are made to suit Indian conditions and requirements, while
matching Whirlpool global quality standard. Types of Washing Machine at Whirlpool are the
below:
Semi Automatic
Fully Automatic
Horizontal Axis
Whitemagic H 70 | 7 kg
H 65 | 6 Kg
Sensation EX | 6.5 Kg
Whitemagic S 70 | 7 kg
F-65 | 6 Kg
Sensation EM | 6.5 Kg
FP 65 | 6 Kg
Whitemagic E 65 | 6.2 Kg
FP 60 DLX | 6 Kg
Whitemagic S60-Buzz | 6 Kg
FP Splash | 5 Kg
Whitemagic SI 60 | 6.2 Kg
Every organization needs inventory for smooth running of its activities. It serves as a link
between production and distribution processes. The investment in inventories constitutes the most
significant part of current assets/working capital in most of the undertakings. Thus, it is very
essential to have proper control and management of inventories. The purpose of inventory
management is to ensure availability of materials in sufficient quantity as and when required and
also to minimize investment in inventories. So, in order to understand the nature of inventory
management of the organization, we took this Inventory Management as a topic for my project, to
give findings and suggestions by adopting and analyzing different inventory control techniques.
REVIEW OF LITERATURE
Inventory generally refers to the materials in stock. It is also called the idle resource of a
company. Inventories represent those items which are either stocked for sale or they are in the
process of manufacturing or they are in the form of materials which are yet to be utilized. It also
refers to the stockpile of the products a firm would sell in future in the normal course of business
operations and the components that make up the product. Inventory management is the integrated
functioning of an organization dealing with supply of materials and allied activities in order to
achieve the maximum co-ordination and optimum expenditure on materials. Inventory control is
the most important function of inventory management and it forms the nerve center in any
inventory management organization. An Inventory Management System is an essential element in
an organization. It is comprised of a series of processes, which provide an assessment of the
organizations inventory.
A manufacturing firm generally carries the following types of inventories:
Raw Materials.
Tools inventory.
Miscellaneous inventory.
Goods in transit.
Scrap Material.
To stabilize production.
Capital cost.
Ordering cost.
Carrying cost.
Shortage cost.
INVENTORY CONTROL
The main objective of inventory control is to achieve maximum efficiency in production &
sales with minimum investment in inventory. Inventory control is a planned approach of
determining what to order, when to order and how much to order and how much to stock, so that
costs associated with buying and storing are optimal without interrupting production and sales.
The benefits of inventory control are:
Economy in purchasing.
PROBLEM STATEMENT
To analyze the efficiency of Inventory Management of Whirlpool of India Ltd.
We will be using inventory management tools for studying the efficiency of Inventory
Management of Whirlpool. This will help us to identify optimum level of inventory which
minimizes the cost, identify the safety stock level for various components & classify the various
components based on its value and movements.
RESEARCH METHODOLOGY
The research design used in this project is Analytical in nature the procedure using, which
researcher has to use facts or information already available, and analyze these to make a critical
evaluation of the performance.
Primary Sources
1.
Data are collected through personal interviews and discussion with Executives.
Secondary Sources
1.
The data are collected from the annual reports maintained by the company for the
3.
Safety Stock.
ABC Analysis.
FSN Analysis.
PERIOD OF STUDY
The period of the study at Whirlpool of India Limited, Puducherry is for one month.
SL.N
Components
Demand
Per
Year
ReOrder
Cost/
order
Holding
Cost/unit/y
ear
EOQ
No. of
units
Ordered
No of
order per
year
Bearing - Ball
Sealed 6006
Driven Pulley NBO - China
(Same pulley)
Wash timer Eco Dlx
(Ningbo) - With
buzzer (S60)
Heater (WW)
Pig tail
connector-3.0
Seal drive tube Swift
WW Motor Welling
360500
18300
57433.2
39000
6.3
240100
2550
40
5532.9
26000
43.4
30000
2550
5531.7
3250
5.4
21700
360250
7050
9300
3
3
10099.0
47260.4
2340
39000
2.1
7.6
43000
9300
12
8163.9
4550
5.3
90100
9300
18
9649.0
9750
9.3
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Splash Motor
Clamp tub
Suspension
Spring Assly FLT
70 (Fimstud)
Door Lock - High
End
Ball BearingOuter, FLT70
Heating Element
, High/Mid
End,FLT70
Pressostat,
FLT70
Timer T2EC6018-FLT
Water
Distribution
Actuator, FLT70
Shock Absorber
Assy, FLT70
Universal Motor
Assy, Mid&High
End,FLT70
Window
Glass,FLT70
Drain Pump, FLT
On / Off Switch
Low end (Push
button switch)
Thermostat
Variable, Low
End, FLT70
Tub Sealing,
FLT70
50000
66700
7300
9300
15150
15000
18
4
3
7188.0
22477.8
8544.0
4550
7215
780
7.0
3.0
0.9
1900
23100
6625.0
195
0.3
3700
12600
6827.9
390
0.5
1900
12600
3459.8
195
0.5
3700
12600
4318.3
390
0.9
1900
13350
4112.2
195
0.5
1900
11850
3874.3
195
0.5
7300
14700
10359.1
780
0.7
1900
73800
19
3841.9
195
0.5
3700
34650
13
4441.2
390
0.8
1900
1900
30150
11550
2
4
7568.7
3312.5
195
195
0.3
0.6
1900
12750
3480.3
195
0.5
3700
2550
3071.6
390
1.2
SAFETY STOCK
Safety stocks are the minimum additional inventory which serves as a safety margin to
meet an unanticipated increase in usage resulting from an unusually high demand and an
uncontrollable late receipt of incoming inventory. If the level of safety stock is maintained is
high, it locks up the capital and there is a possibility of risk of obsolescence. On the other hand, if
it is low, there is a risk of stock out because of which there may be stoppage of production. When
the variation in lead time is predominant, the safety stock can be computed as:
Safety Stock = (Maximum Lead time- Normal Lead time) * Demand
SL.No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Components
1.27
Normal
Lead Time
0.166
Demand
3,60,500
Safety
Stock
3,97,992
Re-order
Point
1254
0.25
0.166
2,40,100
20,168
164
0.27
0.166
30,000
3,120
22
Heater (WW)
Pig tail connector-3.0
Seal drive tube - Swift
WW Motor - Welling
Splash Motor
Clamp tub
Suspension Spring Assly
FLT 70 (Fimstud)
Door Lock - High End
Ball Bearing-Outer,
FLT70
Heating Element ,
High/Mid End,FLT70
Pressostat, FLT70
Timer T2-EC6018-FLT
Water Distribution
Actuator, FLT70
Shock Absorber Assy,
FLT70
0.26
0.27
1.3
0.27
0.98
1.3
1.4
0.166
0.166
0.166
0.166
0.166
0.166
0.166
21,700
3,60,250
43,000
90,100
50,000
66,700
7,300
2,040
37,466
48,762
9,370
40,700
75,638
9,008
15
266
153
67
134
238
28
0.27
0.25
0.166
0.166
1,900
3,700
198
311
1
3
0.27
0.166
1,900
198
0.26
0.98
0.25
0.166
0.166
0.166
3,700
1,900
1,900
348
1,547
160
3
5
1
0.36
0.166
7,300
1,416
7.2
18
19
20
21
22
23
0.27
0.166
1,900
198
1.3
1.3
0.26
0.166
0.166
0.166
3,700
1,900
1,900
4,196
2,155
179
13
7
1
0.98
0.166
1,900
1,547
0.27
0.166
3,700
385
In the above table, safety stock for the various components calculated is shown. Actual
demand is given for each component for a period of 1 year and the lead-time is calculated at a
maximum of 100 days & normal of 60 days and these were converted into per annum. So, from
calculation of safety stock, we can able to determine how much the company can hold the
inventory in reserve stock per annum.
ABC ANALYSIS
The ABC system is a widely used classification technique to identify various items of
inventory for purposes of inventory control. On the basis of unit cost involved, the various items
are classified into 3 categories:
(1) A, consisting of items with the large investment,
(2) C, with relatively small investments but fairly large number of items and
(3) B, which stands mid-way between category A & C.
Category A needs the most rigorous control, C requires minimum attention and B deserves less
attention than A but more than C.
SL.No
Components
Demand
Unit
Cost
Annual Dollar
Volume
Percent of
Annual
Dollar
Volume
Class
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2,40,100
3,500
84,03,50,000
39.99%
90,100
3,60,250
3,60,500
66,700
50,000
43,000
21,700
30,000
3,500
600
500
2,500
3,000
2,500
2,200
1,200
31,53,50,000
21,61,50,000
18,02,50,000
16,67,50,000
15,00,00,000
10,75,00,000
4,77,40,000
3,60,00,000
15.01%
10.29%
8.58%
7.94%
7.14%
5.12%
2.27%
1.71%
A
A
B
B
B
B
B
B
1,900
1,900
5,750
3,500
1,09,25,000
66,50,000
0.52%
0.32%
C
C
7,300
3,700
3,700
7,300
700
1,100
1,000
300
51,10,000
40,70,000
37,00,000
21,90,000
0.24%
0.19%
0.18%
0.10%
C
C
C
C
1,900
1,100
20,90,000
0.10%
1,900
800
15,20,000
0.07%
1,900
3,700
1,900
3,700
1,900
700
350
400
200
260
13,30,000
12,95,000
7,60,000
7,40,000
4,94,000
0.06%
0.06%
0.04%
0.04%
0.02%
C
C
C
C
C
1,900
200
3,80,000
0.02%
Total
Categories
A
B
C
Percentage
13.0%
26.1%
60.9%
2,10,13,44,000
Percentage of Total
Cost
65.28%
32.75%
1.96%
FSN ANALYSIS
All the items in the inventory are not required at the same frequency. Some are required
regularly, some occasionally and some very rarely. FSN classifies items into Fast moving, Slow
moving and Non-moving.
FAST MOVING ITEMS
Bearing - Ball Sealed 6006
Driven Pulley - NBO - China (Same pulley)
Wash timer - Eco Dlx (Ningbo) - With buzzer (S60)
Heater (WW)
Pig tail connector-3.0
Seal drive tube Swift
WW Motor-Welling
Splash Motor
Categories
F
S
N
Percentage
34.8%
65.2%
0.0%
100.0%
CONCLUSION
A better inventory management will surely be helpful in solving the problems the
company is facing with respect to inventory and will pave way for reducing the huge investment
or blocking of money in inventory. From the analysis we can conclude that the Company can
follow the Economic Order Quantity (EOQ) for optimum purchase and it can maintain safety
stock for its components in order to avoid stock-out conditions & help in continuous production
flow. This would reduce the cost and enhance the profit. Also there should be tight control
exercised on stock levels based on ABC analysis & maintain high percentage in fast moving
items in inventories as per on FSN analysis for efficient running of the inventory.
The study takes into account only the quantitative data and the qualitative aspects were not
taken into account.
The assumption made in the EOQ and Safety stock formulas restrict the use of the formula. In
practice, unit cost, lead time, requirements of inventory items are not accurately predictable.
Rate of consumption varies in many cases. As such application of the formula often becomes
a difficult and complicated matter.
ABC analysis is not one time exercise and items are to be reviewed and recategorised
periodically.
REFERENCES